Preamble

The House met at Half past Two o'Clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

SAINT BENET GRACECHURCH BILL

Lords Amendments considered, and agreed to.

BRIGHTON EXTENSION BILL [Lords]

LONDON COUNTY COUNCIL (CRYSTAL PALACE) BILL [Lords]

As amended, considered; to be read the Third time.

FAVERSHAM NAVIGATION BILL [Lords]

NOTTINGHAMSHIRE COUNTY COUNCIL BILL [Lords]

Read a Second time, and committed.

SWINDON CORPORATION BILL [Lords]

To be read a Second time Tomorrow.

Oral Answers to Questions — TRANSPORT

Bridge, Uxbridge Road (Reconstruction)

Mr. Bell: asked the Minister of Transport whether the Slough Corporation have now submitted to him for approval plans for the reconstruction and widening of the road bridge carrying the Uxbridge Road, A 412, over the Grand Union Canal where road traffic is now restricted as to speed and weight on account of the condition of the bridge.

The Minister of Transport (Mr. Barnes): No, Sir, but the borough engineer has discussed preliminary plans with my Department.

Mr. Bell: Is the right hon. Gentleman aware that these restrictions have now been in force for a considerable time?

Will he expedite the reconstruction and widening of this bridge, so that it is fit to carry modern traffic?

Mr. Barnes: For the time being, I think I had better leave it to the experts. When I have received their report I will further consider the matter.

Speed Limit, Tynemouth

Miss Irene Ward: asked the Minister of Transport (1) on what grounds he has refused permission to the county borough of Tynemouth to impose a speed limit of 30 miles per hour within its boundary when Newcastle-upon-Tyne was given such authority covering the Cow Hill which is an open space without buildings of any kind; and if he will reconsider his decision;
(2) on what grounds the application of the county borough of Tynemouth to apply a 30-mile-per-hour speed limit on a portion of the main through road to the coast was refused, when the whole of the main Great North Road, within the boundaries of the city and county of Newcastle-upon-Tyne, is so restricted.

Mr. Barnes: I think it is right to distinguish between the coast road, which was designed as a main through traffic route, and the Newcastle-upon-Tyne road passing Cow Hill and running between Town Moor and Nuns Moor, which are largely used for recreation. Though the North Road, Newcastle-upon-Tyne, is also a through traffic route it has a bad accident record despite the speed limit and the control of junctions by traffic lights and it passes close to Town Moor.

Miss Ward: In view of the fact that the right hon. Gentleman is continually asserting that he accepts the advice of the local authorities in these matters, why does he accept advice from Newcastle and refuse it from Tynemouth? Will he reconsider the application of Tynemouth, as I have requested?

Mr. Barnes: If there is a conflict of local opinion, I think I am justified in coming to a decision on the basis of the purpose for which the road was built.

Immobilised Traffics

Mr. Peter Thorneycroft: asked the Minister of Transport whether His Majesty's Government will introduce


legislation to enable A, B and C licence holders to carry traffics immobilised by the periodic embargoes imposed by British Railways.

Mr. Barnes: No, Sir. Embargoes are an established method of overcoming railway traffic congestion and are usually limited in scope and of short duration. Powers are already available to enable A, B and C licence holders to carry traffic outside the terms of their licence to meet conditions of emergency.

Mr. Thorneycroft: While noting with interest the new method which is to be applied in running the transport system of this country, might I ask the right hon. Gentleman whether he does not recollect that the system of calling in A and B free hauliers, and even C licence holders, was adopted by his Ministry for the purpose of breaking a strike? Surely it would be reasonable to use those methods of transport for overcoming the ordinary hold-ups in the railways which the right hon. Gentleman now regards as a permanent feature of our transport system.

Mr. Barnes: It is not a new method. I do not look upon it as a normal method of overcoming temporary difficulties on the railways. The hon. Member is well aware that if vital food supplies or other necessities are required for the public action must be taken to ensure that they are provided.

Mr. Geoffrey Wilson: Is the Minister aware that one firm in my division had 57 stations out of 58 closed by embargoes on 1st June this year? [AN HON. MEMBER: "For how long?"] Eleven days.

Mr. Barnes: The hon. Member is aware that that has prevailed on many occasions in railway history to overcome temporary difficulties.

Air Commodore Harvey: As the right hon. Gentleman does not accept the advice of my hon. Friend, will he tell the House how he intends to get over these difficulties?

Mr. Barnes: By the method we have always adopted. If there is any difficulty powers exist for the purpose of trying to overcome it, but these temporary embargoes on railway traffic are entirely different from a state of emergency.

Colonel Gomme-Duncan: The right hon. Gentleman says that these things have always happened in railway history. Does he not recall that when the Bill to nationalise this industry was going through the House it was said that everything would be different and that these things would not happen?

Mr. Barnes: A considerable improvement has taken place, but the difficulties have not been removed entirely.

Mr. P. Thorneycroft: asked the Minister of Transport under what Section of the Transport Act, 1947, he acted in conducting discussions with the Road Haulage Executive as to the use of privately-owned A, B and C licence holders for the purpose of carrying traffics immobilised by the road haulage strike in May.

Mr. Barnes: The strike threatened essential transport services and I considered it my duty to see that all necessary steps would be taken to maintain them. It was in discharge of this general responsibility, and not of my functions under the Transport Act, 1947, that I took the action to which the hon. Member refers.

Mr. Thorneycroft: While not quarrelling for one moment with the action taken, may I ask the right hon. Gentleman whether he would not agree that, in those circumstances, it is monstrous for him not to answer Questions in the House of Commons on the subject? Is he aware that I attempted to put down Questions to him at the time, and that he denied all responsibility, and yet he now admits that at that moment he was carrying on conversations with the people concerned?

Mr. Barnes: The question of whether or not I should answer certain Questions has been a matter of discussion and general agreement.

Mr. McAdden: Will the right hon. Gentleman bear in mind the considerable services which A, B and C licence holders rendered to him on this occasion, and remember it when he is urged by his hon. Friends to inflict further injury upon them?

Mr. Thorneycroft: On a point of order. Arising out of this Question, I do not wish to put this point to you now, Mr. Speaker, but I wish to give notice that


I propose to raise it with you as a point of order when you have had time to consider it. The point is that here was a Minister actually engaged in discussions with the Road Haulage Executive and yet flatly refusing to be answerable to the House for the discussions which he was entering upon. I propose at a suitable time to raise with you whether that sort of Question should not be asked and answered in the future.

Mr. Speaker: If the hon. Member will put that in writing, and give me due notice, I will give the matter my consideration.

Statutory Instrument, No. 736

Mr. Boyd-Carpenter: asked the Minister of Transport what action he proposes to take as the result of the Report to this House by the Select Committee on Statutory Instruments on the subject of Statutory Instrument, 1951, No. 736, made by him.

Mr. Barnes: I explained the facts in regard to this Statutory Instrument in a memorandum to the Select Committee which was printed as an appendix to this Report. Subject to the views of the House, I do not think that in the circumstances any action on my part other than that indicated in my memorandum is called for.

Mr. Boyd-Carpenter: Is the right hon. Gentleman aware that it was after the submission to the Select Committee of the memorandum to which he refers, that the Select Committee reported this Order to the House on the ground that it made unusual or unexpected use of the delegated powers? Does the right hon. Gentleman's answer mean that he proposes to treat the recommendations of a Select Committee of the House with contempt?

Mr. Barnes: Surely not. In my reply I said that, subject to any direction, I will do what I indicated in the memorandum, namely, make the regulations permanent after I have consulted the London and Home Counties Committee.

Mr. Boyd-Carpenter: Is the right hon. Gentleman aware that he gives no undertaking in the memorandum not to repeat the practices complained of at present? Is he prepared to give such an assurance now?

Mr. Barnes: This is hardly likely to occur again. There were unusual circumstances, because of the Festival, the action of the police and the necessity for me to authorise special signs. I can hardly imagine that those circumstances are likely to be repeated.

Rear Lights and Reflectors

Lieut.-Commander Baldock: asked the Minister of Transport how many accidents involving personal injury occurred in the last 12 months as a result of collisions at night with parked or slow-moving motor vehicles with defective rear lights.

Mr. Barnes: During the 12 months ended 30th April, 1951, 340 road accidents involving personal injury were attributed by the police primarily to the absence or inadequacy of a rear light on a motor vehicle. Information is not available as to how many of these vehicles were either stationary or moving slowly.

Lieut.-Commander Baldock: Does not the Minister consider that these figures show that an inquiry should be held into the advisability of additional precautions, such as the use of reflectors on slow moving vehicles, in order to stop these dangerous accidents?

Mr. Barnes: I do not think that a special inquiry is justified. The hon. and gallant Member will note that the police keep a check on these figures, which are not abnormal in relation to the total number of accidents.

Lieut.-Commander Baldock: asked the Minister of Transport whether he will introduce regulations requiring islands on unlighted highways to be fitted with red reflectors in addition to being illuminated.

Mr. Barnes: No, Sir. The use of red reflectors on islands might cause drivers to pass them on the right, which would be dangerous.

Sir Waldron Smithers: It is never dangerous to the "right."

Highway Code

Viscount Hinchingbrooke: asked the Minister of Transport whether he will introduce legislation in order to give appropriate sections of the Highway Code the force of law.

Mr. Barnes: I have asked the Committee on Road Safety to consider and advise me on a scheme recently submitted to me for giving selected provisions of the Highway Code the force of law.

Viscount Hinchingbrooke: May we take it that the right hon. Gentleman is referring to conversations which he had with Mr. Edward Terrell, as reported in "The Times"? Can he say specifically whether Mr. Terrell will be invited to give evidence in person before the appropriate Departmental committee?

Mr. Barnes: Yes, Sir. But this is not a Departmental committee. It is my Committee on Road Safety of which the Parliamentary Secretary is chairman. I have arranged for Mr. Terrell to discuss the matter with that body.

Omnibuses, Victoria Station

Mr. W. Robson-Brown: asked the Minister of Transport if he will inquire into the habit of omnibuses going into Victoria Station, first stopping for several minutes on the streets outside the Station yard; and, in view of the congestion and inconvenience caused by this practice to the flow of traffic, if he will take steps to stop it.

Mr. Barnes: Buses occasionally arrive ahead of schedule when there is no room for them in the forecourt at the station. The London Transport Executive inform me that they do their best to minimise this, but it cannot be avoided altogether.

Mr. Robson-Brown: Is the right hon. Gentleman aware that this is a regular happening, and that I have seen buses standing in a line in the main streets outside the railway station at a time when there has been room in the yard, otherwise I should not have brought this matter forward; and does he realise that a re-scheduling of the buses is called for? Further, and most important, is he aware that visitors to London—frequently foreign visitors—often get off these buses under the impression that they have finished their journey and, at the risk of life and limb, go through the traffic to get to the station?

Mr. Barnes: The hon. Member has said that he has seen buses outside the station when there has been room in the yard, and I will have that matter investigated. Generally speaking, these buses

serve routes on which there is very heavy traffic, and it is impossible to keep them to a five minute schedule. London Transport keep a careful check, but I will have inquiries made.

Mr. Henry Strauss: How does one cure an omnibus of a bad habit?

Road Maintenance

Viscount Hinchingbrooke: asked the Minister of Transport how much was spent from all sources on new constructions, improvement and maintenance of the roads in 1950–51; and what is the estimate for the current financial year.

Mr. Barnes: A firm figure for 1950–51 will not be available until returns of actual expenditure have been received from local highway authorities, but I estimate that total expenditure was about £56 million compared with an estimate of about £60 million for the current year.

Viscount Hinchingbrooke: Can the right hon. Gentleman say whether a sum of £18 million is necessary over and above the expenditure last year to put the roads into a normal state of maintenance and repair? If so, can he say how much of that £18 million he has had Treasury permission to spend this year?

Mr. Barnes: I should not like to commit myself to the figure. In this case, the hon. Member will see that there is increased provision, and this is primarily to improve the maintenance standard, which is now just over 60 per cent. We hope to raise it to approximately 70 per cent.

Lord Malcolm Douglas-Hamilton: asked the Minister of Transport whether, in view of the poor state of the unclassified roads in the Highlands, he will ensure that in any special arrangements for road construction to be made, whether for strategic or other purposes, no attempt will be made to curtail expenditure proposed by local authorities for these roads.

Mr. Barnes: Expenditure on the highway system of the country as a whole has to be limited in view of other demands of vital importance upon the national resources. Of the amount available for roads, it is necessary that a due proportion should be spent on those of the greatest importance to the community. It is for this reason that the Government


have decided that total expenditure on unclassified roads should be restricted, and I cannot ignore this policy in dealing with the Highlands.

Lord Malcolm Douglas-Hamilton: is the right hon. Gentleman aware that the expenditure on unclassified roads in the Highlands is approximately one-half per mile per annum compared with the rest of the country? Will he bear that in mind?

Mr. Barnes: That may be so, but, taking Scotland as a whole, I do not think that the roads there have been neglected either under this form of expenditure or under grant-aided expenditure.

Lord Malcolm Douglas-Hamilton: Does not the right hon. Gentleman agree that deterioration of such roads in the Highlands is proceeding faster than reconstruction?

Mr. Barnes: I fully agree that all our roads could do with a higher standard of maintenance, but I do not agree that Scottish roads suffer by comparison.

Mr. Malcolm MacMillan: While recognising that special action is needed in regard to these roads owing to their particularly bad condition, may I ask my right hon. Friend if he does not agree that much progress could have been made by local authorities in those areas had they not supported Lord Woolton's appeal that there should be no public expenditure for this purpose?

Viscount Hinchingbrooke: Since the right hon. Gentleman does not dispute that only about half is spent on Scottish roads compared with roads in England, is there no room for readjustment of expenditure in the interest of Scotland without asking for any more money overall?

Mr. Barnes: I do not think there is any justification for a special concession for Scotland. As a matter of fact, last year the Government agreed to an expenditure of £750,000 for a special additional grant for roads in Scotland.

Lord Malcolm Douglas-Hamilton: In view of the unsatisfactory nature of the reply, I beg to give notice that I will raise this matter on the Adjournment.

Consultative Committees

Mr. Vaughan-Morgan: asked the Minister of Transport how many meetings of the London Transport Users Consultative Committee have been held during the last 12 months; when the last meeting was held; when the next will be held; and what was the cost of the committee during the last 12 months.

Mr. Barnes: This Committee met four times during the last 12 months. Its last meeting was on 14th June, and its next will be on 13th September. No separate figure of the cost is available, but for the year 1950 this Committee, together with the Central Transport Consultative Committee, cost £6,228.

Mr. Vaughan-Morgan: Does the Minister consider that four meetings a year are adequate to deal with the number of complaints there are?

Mr. Barnes: The statutory number is two, and any three members of the Committee can always convene a special meeting for any purpose which they consider is warranted.

Mr. P. Thorneycroft: Are we to assume from the right hon. Gentleman's reply that he agrees with the statement of the hon. Member for Coventry, East (Mr. Crossman), that the Socialist movement has always assumed that no consumers' council would ever work, and was not in the least surprised that it did not?

Mr. Barnes: I am not conversant with, nor do I very much care about, what any particular hon. Member says —[HON. MEMBERS: "Oh!"]—but I am entitled to emphasise that the consultative machinery under the Transport Act is designed to serve a useful purpose, and, judging by the type of persons who have accepted invitations to serve throughout the country, they take the same view.

Colonel Gomme-Duncan: Quite apart from his views on his hon. Friend, has the right hon. Gentleman any concrete evidence that a consultative committee has ever been of any use to the consumer?

Mr. Barnes: The comments I might direct elsewhere apply to hon. Members opposite as well.

Mr. Vaughan-Morgan: Will the Minister consider ordering the Committee to have a monthly meeting, so that these matters can be dealt with more expeditiously?

Mr. Barnes: No, Sir.

Miss Ward: asked the Minister of Transport how many reports he has received from area consultative committees; and which areas.

Mr. Barnes: There is no provision in the Transport Act for these committees to report to me. Their recommendations and conclusions are sent to the Central Transport Consultative Committee and to the British Transport Commission.

Miss Ward: Has the right hon. Gentleman, through that report, had his attention directed to the fact that the Great Northern Hotel is now charging 5s. per head for baths? Does he think that a good advertisement for foreign visitors coming to this country?

Mr. Barnes: If any point raised by an area consultative committee is considered important enough, then the Central Transport Consultative Committee record it and pass it on to me.

Commander Noble: Is the right hon. Gentleman aware that it would appear from his answers that the line he seems to take when any complaints are made is that the consumer is always wrong?

Mr. Barnes: On the contrary, I nearly always take the view that the consumer is always right.

Regent Canal

Captain Field: asked the Minister of Transport whether, in view of the danger to children, he will cause an inquiry to be made into the unguarded stretch of the Regent Canal, between Warwick Avenue and Maida Vale.

Mr. Barnes: It is open to the local authority to take action under the Canals Protection (London) Act, 1898. This Act provides in effect that if, in the opinion of the local authority, any part of a canal in London within its jurisdiction is insufficiently protected at any place where it abuts upon a public highway so as to involve danger to human life the local authority can require the canal

undertakers to erect and maintain such fences as may, in their opinion, be required to obviate the danger.

Fryent Way, Wembley (Speed Limit)

Wing Commander Bullus: asked the Minister of Transport if he will apply the 30 miles per hour speed limit to Fryent Way, Wembley.

Mr. Barnes: No, Sir. On the advice of the London and Home Counties Traffic Advisory Committee I have recently removed the speed limit from a length of this road which is not built-up.

Wing Commander Bullus: Is the right hon. Gentleman aware of the considerable local feeling in this matter, and of the unhappy threat by some parents to lie down in the road to prevent this thoroughfare becoming a speedway track? Does he not recall the fact that the local council did make representations to him with a view to this particular thoroughfare having a speed limit?

Mr. Barnes: I am quite aware that this sort of thing represents a very controversial subject from time to time right throughout the country, but we really must apply certain tests and standards; otherwise, the whole of our roads, at some time or other, will become subject to these speed restrictions.

Western Region Railways (Safety)

Mr. Nabarro: asked the Minister of Transport if he is aware of the concern of the travelling public at the decline in safety standards in the Western Region of British Railways since nationalisation, due to the alteration and modification of the pre-nationalised Great Western Railway arrangements for automatic signalling and train control; and if he will make a statement.

Mr. Barnes: I have seen references in the Press to local representations by the footplate staff of the Western Region, who are objecting to certain recent changes. I am, however, satisfied, on the advice of the inspecting officers of railways, that there has been no relaxation of the necessary standards of safety and that there is no cause for apprehension by the travelling public. The automatic train control system of the old Great Western Railway Company has not been altered, and the wider extension of automatic train control


of an improved type, which is now under large-scale experiment, has been accepted as desirable by the British Transport Commission.

Mr. Nabarro: Can the right hon. Gentleman give the House the assurance that no decline in signalling and train control standards will be permitted in the near future, particularly in view of an allegation by the Great Western men which reads:
Reckless and inefficient administration under nationalisation has impaired the efficiency of the Western Region of British Railways.

Mr. Barnes: If the hon. Member reads my reply, I think he will find that the assurance is quite specific, but I should emphasise that the inspecting staff of my Department are entirely responsible to the Ministry, and are in no way subject to Railway Executive or Transport Commission influence or directions.

Mr. Llewellyn: Is the Minister aware that over 1,000 railwaymen have signed a petition, and is he suggesting that his views are right and that the views of 1,000 railwaymen are wrong?

Mr. Barnes: I am not suggesting that my views are right at all, but what I am giving here is the considered judgment of my railway inspecting officers, who are very familiar with these matters, and I would rather not comment on views that may dissent from them.

Mr. G. Wilson: Is the Minister aware that some Western Region drivers contend that the higher accident rate on the old L.M.S. than on the Great Western in pre-war days was due to the rule regarding speed restrictions on that railway, which has now become standard for all railways?

Mr. Barnes: No, I am not aware of that.

Mr. George Thomas: Has the Minister received any official representations on this matter from the union concerned?

Mr. Barnes: I could not say off-hand, but I do know that this is the subject of more or less continuous examination by the railway unions and the railway managements. Also, my own inspecting officers examine every proposed change. They are an independent technical body and contribute to the discussions. In so

far as inquiry is more or less continuous, I do not like to give a direct negative.

Viscount Hinchingbrooke: On a point of order. May I ask you, Mr. Speaker, whether you will be good enough to take note of this Question as being the useful prototype of the kind of Questions which the Minister has refused in the past, but which we are all delighted to see on the Order Paper?

Mr. Barnes: Further to that point of order. This question affects the railway inspectorate department of my Ministry and, therefore, raises a different issue from matters of management by the Transport Commission.

Mr. Speaker: If the noble Lord was making any reflection on the way in which Questions are selected by the Chair, that is out of order. I think the Minister has put it quite clearly.

Roundabout, Sturminster Marshall

Mr. Crouch: asked the Minister of Transport what will be the cost of the construction and erection of the eight 25 feet concrete columns carrying sodium-type lamps at the trunk road at Roundhouse roundabout at Sturminster Marshall.

Mr. Barnes: Tenders have not yet been obtained for this work, but I estimate that the cost of construction and erection of the eight columns, together with sodium-type lamps, will be £500 approximately. In addition, the cost of cable and switching connections will be about £400.

Mr. Crouch: On what grounds does the right hon. Gentleman feel justified in embarking on this great expenditure? Has he had a census made of traffic during the hours of darkness?

Mr. Barnes: No, but I want to inform the hon. Member that as a result of his series of Questions it is my intention to look further into this matter. I understand that this was a rather bad accident area before this reconstruction took place.

Trunk Road Roundabouts (Planting)

Mr. Crouch: asked the Minister of Transport if he will give instructions to all road authorities to offer the surrounds


and centres of roundabouts on trunk roads to local nurserymen, on condition that they maintain them free of cost in return for the advertising facilities provided.

Mr. Barnes: I do not think that the exhibition of advertisements on roundabouts would be at all desirable.

Mr. Crouch: Is the right hon. Gentleman conversant with the type of advertising involved on these sites, which is a board about six inches high and about two feet long, and does not distract the attention of the motorist? Is he aware that the Wimborne Festival Gardens were entirely laid out by private enterprise?

Mr. Barnes: I deprecate advertisements on highways which divert the attention of drivers from the essential signs.

Mr. Gerald Williams: Has the Minister taken the trouble to see the derelict sites in various parts of the country which have been converted into beautiful gardens in this way, where the signs are not obnoxious and are not more than two feet long? If not, will he do so?

Ministry Horticulturists (Duties)

Mr. G. Wilson: asked the Minister of Transport what are the functions of the horticulturist and assistant horticulturist in his Department, referred to in the Civil Estimates, Class VI, page 145.

Mr. Barnes: The duties of the two officers are to prepare, supervise and coordinate planting schemes on trunk roads; to advise on contracts for the propagation and production of plants and to supervise the growth of the stock; and to ensure economy in the supply and use of plants and their subsequent upkeep. They also examine planting proposals submitted by local highway authorities in connection with applications for grants from the Road Fund.

Mr. Wilson: Is the Minister aware that the combined estimate for these two gentlemen is £1,788, and can he say how much of their time is taken up in dealing with roundabouts such as my hon. Friend suggested?

Mr. Charles Ian Orr-Ewing: Can the right hon. Gentleman say whether these

gentlemen have a good knowledge of pruning?

Sir William Darling: Do these gentlemen do anything towards the discontinuation of weeds along our public roads which interfere with farm crops?

Mr. Barnes: The construction of roadways and their planting can add considerably to the amenities. Highway authorities need the advice of central experts on these matters, and I do not think that this expenditure ought to be begrudged.

Mr. P. Thorneycroft: Would not the Minister agree that this is a gross waste of public money? Is it not a monstrous thing that poor people should have to pay Purchase Tax in order to pay the salaries of gentlemen who then go out and plant out our highways?

C Licence Vehicles

Mr. G. Wilson: asked the Minister of Transport the total number of C licences issued at the most recent convenient date; how many of such licences relate to trailers drawn by tractors for which a separate C licence is issued; vehicles carrying goods or produce from one section of a commercial undertaking to another without going upon the highway; or vehicles of less than 30 hundredweights unladen weight, respectively.

Mr. Barnes: At 31st March, 1951, there were 385,001 C carriers' licenses in force covering 747,898 mechanically propelled road vehicles, of which 410,266 did not exceed 30 cwt. unladen weight. No record is available of the number of trailers authorised under C licences, and no trailers are included in the figures I have just given. No carrier's licence is required for a vehicle which is not used on the roads.

Mr. Wilson: Can the Minister further break down the figures with regard to C licences? He will no doubt appreciate the point of the Question, that we are trying to arrive at the actual number of C licences issued for road haulage?

Mr. Barnes: I would remind the hon. Member that quite recently considerable steps were taken for the purpose of compiling these statistics. I should not like to incur any further expense at the moment.

Transport Commission (Minister's Meetings)

Mr. Donnelly: asked the Minister of Transport how many times he has met the Transport Commission since it was set up; and whether he has made arrangements for meeting it at regular intervals.

Mr. Barnes: I have no precise account of the many times I have met the Transport Commission or its members, but I do so whenever I judge it necessary. I do not meet them at regular intervals.

Mr. Donnelly: Will my right hon. Friend bear in mind that there is considerable support on this side of the House for his taking more energetic ministerial action to create greater decentralisation in this matter? Will he also bear in mind that there is great support on this side of the House for seeing that the people who have mismanaged this industry in the past should not continue to do so, thus sabotaging the will of the people?

Mr. Barnes: My hon. Friend must not assume that the process of decentralisation is not going on; it is, and very considerably.

Mr. Donnelly: Would my right hon. Friend look into any specific examples of greater centralisation which has taken place recently?

Projecting Loads

Mr. Vane: asked the Minister of Transport whether he is aware that the advice in paragraph 44 of the Highway Code to drivers of vehicles carrying projecting loads is not being complied with; and what action he proposes to take in order to protect other road users.

Mr. Barnes: I have no information that this advice is being disregarded, but if the hon. Member will let me have any evidence that it is in cases where danger is likely to be caused to other road users I will be glad to consider it.

Mr. Vane: Is the Minister aware that if he motors along A.6 on a day of poor visibility he will find pieces of machinery of all kinds—lifeboats, combine harvesters, etc.—on trailers and various sorts of trucks, which project over the road and which have only the most skimpy bit of grey rag attached to them to mark their extremity.

Mr. Barnes: I have often motored along A.6, and I may say that, generally speaking, my observations do not confirm what the hon. Member has said. In any case, special loads come under police direction.

Mr. Vane: Is it not a fact that at night the extremities of such loads must be marked by lights whereas in the day this is not so? Does not the Minister agree that it is time that the two methods were put on a proper basis?

Mr. Barnes: The light at night is, of course, according to regulation. I do not think the light method in the day time would be so suitable as the attaching of rag, or whatever it may be, which is more easily discernible in daylight.

Transport Costs (Remote Areas)

Lord Malcolm Douglas-Hamilton: asked the Minister of Transport whether in view of the Transport Tribunal's announcement on 6th April, 1951, that the Charges Scheme would not be available before 1954, he proposes to take any steps in the meantime to alleviate the burden of high transport costs in remote areas, particularly in the Highlands and Islands of Scotland, by means of subsidy.

Mr. Barnes: No, Sir. Such a subsidy, which would be primarily for the benefit of trade and industry in Scotland, would not be a matter for me.

Lord Malcolm Douglas-Hamilton: Does not the right hon. Gentleman agree that at present there is no prospect of alleviation of transport costs in the remote areas until 1954, whereas at the same time there is no guarantee that costs may not be putting a greater proportionate burden on these areas?

Mr. Barnes: Whether that may be so or not, there still remains the question of a special subsidy for roads in any special part of the country and that is not within my determination.

Mr. Hector Hughes: Has my right hon. Friend received from the fish merchants and curers of Aberdeen a memorandum on the subject of high freight charges and late deliveries of fish at Billingsgate? If he has received that memorandum will he consider it?

Mr. Barnes: I am sure my hon. Friend is aware that if there is any question of a special rate for fish it does not fall to my Department to determine it.

Mr. P. Thorneycroft: What is the Minister proposing to do? Is he going to wait until 1954, while periodic flat-rate increases are made which are a particularly crippling burden to these areas, or has he any suggestions at all to make?

Mr. Barnes: I certainly do not find any assistance from the interjections of the hon. Member.

Oral Answers to Questions — SHIPPING

Defence Shipping Authority

Commander Noble: asked the Minister of Transport whether countries within the North Atlantic Treaty Organisation, which also have commitments in other parts of the world, are free to decide how they allocate their shipping to the Defence Shipping Authority; and, if not, how this is to be done.

Mr. Barnes: The intention is that the Defence Shipping Authority should be responsible for meeting shipping needs in all parts of the world, not only in the North Atlantic area. Countries having commitments in other parts of the world could, therefore, call upon the services, not only of their own ships, but also of all other ships under the control of this Authority.

Flag Discrimination

Captain Ryder: asked the Minister of Transport to what extent British shipping is penalised by flag discrimination; and what representations have been made to other countries in this connection.

Mr. Barnes: I regret that it is not possible to state the extent to which British shipping has been penalised by flag discrimination, nor to state, within the limits of a Parliamentary answer, the representations that have been made to other countries in this connection, but as the hon. and gallant Member is aware it is the policy of His Majesty's Government to do their utmost to secure the removal of all forms of flag discrimination.

Captain Ryder: Would the right hon. Gentleman say whether this practice is increasing or decreasing?

Mr. Barnes: It all depends on the periods. I should say that, in the immediate post-war years, there has been a tendency for it to increase. The Government continually follow these matters up and make representations with a view to minimising them as far as possible.

Oil Pollution

Mr. Roland Robinson: asked the Minister of Transport what information he has received following the inquiries he has recently made from local authorities and other bodies on the subject of the pollution of the sea and of beaches by oil; and what action he proposes to take as a result.

Mr. Barnes: The inquiries to which the hon. Member refers cover all aspects of the problem of oil pollution, including the extent, cause and effects of, and possible remedies for, pollution of the coasts of the United Kingdom. When the replies have been received and collated a summary will be sent to the Secretary-General of the United Nations in accordance with the recommendation made by the Transport and Communications Commission of the Economic and Social Council of the United Nations in April, 1951.

Mr. Robinson: As it is now over three months since the Minister asked for information from local authorities for submission to the Inter-Governmental Maritime Consultative Organisation of the United Nations, can he say when that organisation is to be set up?

Mr. Barnes: I cannot expedite the replies from local authorities. They are coming in, and when sufficient information is in my Department the necessary action will be taken.

Mr. G. R. Howard: Is the Minister aware that this is a matter of very great concern in the West Country, especially in Cornwall?

Mr. Barnes: Yes, I appreciate that.

Mr. Somerville Hastings: Can my right hon. Friend say whether, when this report is prepared, there will be an opportunity for hon. Members to see it in, for instance, the Library, or elsewhere?

Mr. Barnes: I will certainly take note of that.

Oral Answers to Questions — MINISTRY OF SUPPLY

Cartridges

Mr. G. Williams: asked the Minister of Supply if he will increase the supply of cartridges in order to facilitate the destruction of vermin.

The Minister of Supply (Mr. G. R. Strauss): The principal manufacturers of these cartridges increased supplies to the trade from 1st May last. If the hon. Member knows of any area where there are special difficulties, and will let me have details, I will investigate them.

Mr. Williams: Is the Minister aware that most suppliers are allocating cartridges on the basis of the number taken in the previous year and that where people did not have any the year before there is a great deal of unfairness? Is he also aware that a very small extra supply of cartridges would get rid of that unfairness?

Mr. Strauss: We have increased the supplies. If the hon. Member will let me have particulars of any special cases, I will look into them.

Mr. Paget: What guarantee can we have that any such cartridges are used for the destruction of vermin?

Mr. Bossom: Will the Minister look into conditions generally in the rural areas of Kent, where we are experiencing great difficulty in this matter?

Twin-Engined Helicopter

Mr. Dodds: asked the Minister of Supply what progress has been made in the development of the twin-engined helicopter, the Bristol 173.

Mr. G. R. Strauss: The Bristol Aeroplane Company, Limited, are carrying out ground running tests of the first prototype of the Bristol 173. When these are satisfactorily completed flight testing will begin.

Mr. Dodds: In view of the importance of the helicopter in peace or war will the Minister give every possible support to this new effort to lead the world in helicopters? What is the seating capacity of the Bristol 173?

Mr. Strauss: The Bristol 173 has a seating capacity of 10 to 12 passengers

and this is the first effort we are making. We must wait and see the results of these tests before we take any further steps.

Iron and Steel Scrap Exports

Lieut.-Commander Baldock: asked the Minister of Supply how many tons of iron and steel scrap have been exported to Canada in the last three months.

Mr. G. R. Strauss: No exports of iron and steel scrap are recorded for the months of March, April and May of this year, the latest dates for which figures are available.

Lieut.-Commander Baldock: Is the Minister aware that his information does not coincide with mine and will he investigate any case I bring to his notice?

Mr. Strauss: I can account for that. The Board of Trade classification of iron and steel scrap includes certain materials which are strictly not iron and steel scrap, such as used steel articles, but we did not export during those months iron and steel scrap proper, as normally understood.

Lieut.-Commander Baldock: Will the Minister endeavour to stop the export of used steel articles to Canada while there is such a shortage in this country?

Mr. Strauss: They are only exported under licence in special circumstances and very little has been exported.

Iron and Steel Production

Mr. Nabarro: asked the Minister of Supply whether he is yet in a position to give a reliable forecast of the total British production of iron and steel for the year 1951; and to what extent that production, added to iron and steel imports, will be adequate for the needs of the defence and export programmes and essential home consumption.

Mr. G. R. Strauss: No reliable forecast of total United Kingdom production of iron and steel for this year can yet be given, but supplies should be adequate to meet the general requirements of the Defence and other essential programmes.

Mr. Nabarro: In view of the Chancellor's statement last Thursday, when he said there would be a 10 per cent. gap between aggregate demand and aggregate supply, surely it is not unreasonable to ask the Minister to give us the arithmetic of the position.

Mr. Strauss: I said that no reliable forecast can yet be given, and anyhow the Chancellor did not give a specific figure of 10 per cent. He said it was unlikely to be more than 10 per cent.

Mr. Peter Roberts: In view of the Chancellor's statement, is not the Minister aware that there is a serious shortage at present? Does that mean that production is to be increased in the last half of the year?

Mr. Strauss: No, there is a shortage now and I fear there will be a shortage during the rest of the year. The Question asks whether there will be sufficient to meet defence and other essential programmes and my answer is that, on the whole, there will be.

Mr. P. Roberts: Does that mean that supplies to other users will have to be cut down?

Mr. Strauss: When the allocation scheme comes into operation there will be some users who will have to do with rather less than they are using now.

Captain Duncan: When the Minister talks about essential programmes does he include agriculture?

Mr. Strauss: Some aspects of it, certainly.

Mr. Nabarro: When will the Minister give a reliable forecast?

Mr. Strauss: There are some uncertain factors and it is misleading to give any figure unless one knows how circumstances will turn out.

Mr. Edelman: asked the Minister of Supply what action he has taken to ensure that there will be adequate supplies of imported iron ore for steel production in 1952.

Mr. G. R. Strauss: The Iron and Steel Corporation of Great Britain is doing everything possible to ensure adequate supplies in 1952.

Mr. Edelman: In view of that reply, will my right hon. Friend say whether he is satisfied with the present control over the iron ore importing companies by the Iron and Steel Federation? Will he also take care to ensure that the Federation does not use these companies to frustrate the will of the people as expressed in an Act of Parliament?

Mr. Strauss: I am not at all satisfied that the Corporation have, at present, adequate control over the importing companies.

Captain Ryder: If I produce a case where the action of the Coal Board in withholding a supply of bunkers to a ship on charter is impeding the import of iron ore into this country, will the Minister look into it?

Mr. Strauss: I will certainly do so.

Mr. Mitchison: If my right hon. Friend has not got adequate powers over the Federation will he consider means of getting it soon?

Mr. Strauss: The matter is at present under discussion between the Iron and Steel Corporation and the Federation, and I hope that the outcome will be satisfactory.

Machine Tools (Defence Programme)

Mr. Nabarro: asked the Minister of Supply the aggregate value of machine tools for the defence programme received in the United Kingdom during the period of 12 months ended June 1951, respectively, from American and Continental sources; the values respectively of machine tools for the defence programme outstanding for delivery from these sources; to what extent delivery is proceeding according to schedule; and whether he will make a statement.

Mr. G. R. Strauss: My Department has ordered machine tools for the defence programme from the United States and Western Europe to the value of £53 million and £40 million, respectively, during this period. Deliveries so far, amounting to £500,000 and £1 million, respectively, have been made as scheduled. Large-scale deliveries are not due to start until later in the year and all practical steps are being taken to ensure that our requirements are met in time.

Mr. Nabarro: Can the Minister give the House an assurance that he expects the arrival of all these machine tools at a rate commensurate with the rate of increased output of tanks, guns, aircraft and military impedimenta of all descriptions?

Mr. Strauss: There is no reason at the moment to suggest that we shall not get these machine tools in time, but it is impossible to give any guarantee.

Mr. Sydney Silverman: Can my right hon. Friend say whether the Continental sources referred to in the Question include Czechoslovakia and what is now the position with regard to the reciprocal orders for machine tools placed between Czechoslovakia and this country?

Mr. Strauss: I could not give an answer to that without notice.

Steel Supplies

Sir Ian Fraser: asked the Minister of Supply whether he will now make a statement about the availability of steel supplies during the remainder of this year; and in what direction it is proposed to restrict their use.

Mr. G. R. Strauss: I would refer the hon. Member to the statement made by my right hon. Friend, the Chancellor of the Exchequer last Thursday.

Sir I. Fraser: Would the right hon. Gentleman take advantage of this Question to give us further details? Will he also undertake that in any restriction the needs of agricultural machinery, especially agricultural spares, will be borne in mind?

Mr. Strauss: Yes, Sir. The hon. Member can be assured that we realise the importance of agricultural machinery.

Mr. P. Roberts: In view of the Chancellor's reply, to which the Minister referred, and the shortage he mentioned, is the Minister now prepared to take action to stop the export of 100,000 tons of steel rails to Persia which the Government have now authorised and which will be badly needed in this country?

Mr. Strauss: I should like to see that question on the Order Paper, and anyhow it is a question for the President of the Board of Trade.

Non-ferrous Metals

Mr. P. Roberts: asked the Minister of Supply on what date the Iron and Steel Corporation drew his attention to the serious shortage of aluminium, nickel and zinc.

Mr. G. R. Strauss: The Iron and Steel Corporation are not responsible for aluminium, nickel and zinc.

Mr. Roberts: Will the Minister please answer the Question? I asked him on what date that information was given to his Department. Will he say whether such information was given to his Department or not?

Mr. Strauss: As the Iron and Steel Corporation have no responsibility whatsoever for aluminium, nickel and zinc, obviously they do not communicate with me on that subject.

EMERGENCY LEGISLATION

Mr. Clement Davies: asked the Prime Minister whether, in view of the judgment of the King's Bench Divisional Court dismissing the appeal of Clarence Harry Willcock from a decision of magistrates concerning the refusal to produce an identity card, he will review in all Departments concerned the emergency legislation still existing so as to terminate such legislation at an early date.

The Prime Minister (Mr. Attlee): The emergency legislation still in force is already kept under review, so that powers which are no longer required may be relinquished without delay.

Mr. Davies: Is the Prime Minister aware of a statement made by the Home Secretary, I think, on 27th June last year, that the National Register and the identity card were both alien to the British mode of life, and, further, that he apparently went on to state, on behalf of the Government, that the then Minister of Health proposed to bring forward a Bill to abolish both the Register and the identity card—a statement made in the Standing Committee upstairs on the Maintenance Orders Bill?

The Prime Minister: I shall have to look that up.

Lieut.-Colonel Lipton: When my right hon. Friend looks up that statement will he then consider the desirability of at least reviewing the identity card system, which is now being used for a variety of purposes quite outside the original reasons for which the identity card was introduced?

The Prime Minister: I think that is another question. There is, of course, a case for looking into it.

Sir W. Smithers: Will the Prime Minister introduce legislation to allow those who are convicted under emergency powers by county agricultural executive committees to bring an appeal to a properly constituted court? Why does not the right hon. Gentleman answer?

GOVERNMENT MACHINERY

Mr. Geoffrey Cooper: asked the Prime Minister if, in view of the succession of Cabinet casualties through illness during the last six years, resulting from the heavy strain of office, he will consider setting up an investigation into the machinery of government, with a view to reducing the strain on individual Ministers by a suitable system of decentralisation.

The Prime Minister: No, Sir.

Mr. Cooper: Since the Machinery of Government Committee of the Cabinet set up in the last Parliament is reputed to have met only twice and since then has ceased to function, and since representations were made to my right hon. Friend by a group of Labour Members suggesting that action should be taken about this very important matter, could the Prime Minister say what steps are intended to be taken by the Government with a view to something being done?

The Prime Minister: The matter is considered from time to time.

Sir Herbert Williams: Would it not be simpler to give the whole lot a holiday and have a change?

Mr. Emrys Hughes: Would there not be less strain on Ministers if there were a greater measure of self-government for Scotland?

Sir Edward Boyle: Have the carefully considered and entirely non-party arguments put forward by Sir John Anderson in a Romanes lecture in 1946 been carefully considered by the Government?

The Prime Minister: I shall have to look that up.

SLAUGHTERHOUSES (INSPECTION AND CONTROL)

Mrs. Ganley: asked the Prime Minister whether he will initiate consideration of one Department being made responsible for the inspection and control of slaughterhouses for horses as well as other animals throughout the country.

The Prime Minister: I think this question must await the outcome of the consideration now being given to the long-term arrangements for the slaughter of home produced livestock. In this connection the Ministry of Food and the Ministry of Agriculture are having discussions with the interests concerned.

Colonel Gomme-Duncan: Are discussions going on with the Secretary of State for Scotland on the same point?

The Prime Minister: Yes, Sir.

IRON AND STEEL FEDERATION (MINISTER'S SPEECH)

Mr. Hollis: asked the Prime Minister whether the speech of the Minister of Supply at Margate on 21st June, to the effect that drastic action would be taken against the Iron and Steel Federation if the Federation refused to the Iron and Steel Corporation effective control of purchase of iron ore abroad, represented the policy of the Government.

The Prime Minister: My right bon. Friend was outlining the difficulties facing the Iron and Steel Corporation of Great Britain and the steps it might have to take to overcome them so as to carry out its statutory obligations under the Iron and Steel Act, 1949. The Government naturally wish effect given to the will of Parliament and continue to hope that the Federation will co-operate with the Corporation in reaching a commonsense solution which will avoid the need for any drastic action.

Mr. Hollis: Is the Prime Minister aware that the Minister of Supply accused the Federation of using every device, legal or otherwise? Will he tell the House whether he repudiates that charge on behalf of the Minister of Supply, or whether he supports it?

The Prime Minister: Any question with regard to a statement made by my right hon. Friend can be put to him. I have been asked about the policy of the Government, and I have stated that.

Mr. Hollis: On a point of order. May point out, Sir, that I specifically asked whether I could put that Question to the Minister of Supply and was told I could not because the statement to which I refer was not made in the House? I therefore put the Question to the Prime Minister.

Mr. Eden: Would the Prime Minister tell us what are the measures other than legal which have been taken by the Federation?

The Prime Minister: I did not quite catch that question.

Mr. Eden: Would the right hon. Gentleman tell us the measures other than legal which, according to the Minister, this Federation have taken?

The Prime Minister: I am not aware of that statement.

Mr. Eden: It is a statement which the Minister made and which has been questioned.

The Prime Minister: The Question in which I am interested relates to drastic action.

Hon. Members: We cannot hear.

Mr. Gammans: Now that we have got to the stage where men can be threatened with unspecified punishments for committing unspecified crimes, would it not be as well for the Government to consider opening a concentration camp? Would it not be a good idea to beat people with rubber truncheons to put them in a right frame of mind?

The Prime Minister: I find nothing in this Question about crimes. It is a Question about taking drastic action.

Mr. Chetwynd: Has my right hon. Friend had a request from the Leader of the Opposition for a meeting in order to enable the Opposition to help the Government carry out this Act of Parliament?

Mr. H. Strauss: What importance does the right hon. Gentleman attach to the fact that the occasion chosen for this

statement of Government policy was a meeting of a trade union which proceeded to pass a number of Communist resolutions?

PRIME MINISTER (PUBLIC RELATIONS ADVISER)

Mr. Lionel Heald: asked the Prime Minister what duties he has assigned to the full-time Public Relations Officer recently appointed to No. 10 Downing Street; and, in particular, what responsibility such duties will include for election messages or other party propaganda issued in the name of the Prime Minister.

The Prime Minister: The post of Adviser on Public Relations to the Prime Minister has been filled following the recent death of Mr. Philip Jordan. The present holder of the post will perform the same duties as his predecessor and these arise from the day-to-day contacts of the Press with the Prime Minister's office. The Adviser is a civil servant and he has no responsibility for election messages or other matters concerning the Labour Party as such.

Mr. Heald: Would the right hon. Gentleman reconsider that decision in view of the recent report in "The Times" of an election message sent to Westhoughton in the name of the right hon. Gentleman accusing the Opposition of obstruction during the Finance Bill and in view of the flat contradiction of that accusation by the two Ministers in charge of the Bill and also by the action of the Government in putting down on the Report stage more than 2,000 words of Amendments and new Clauses to meet the points raised by the Opposition? Further, does not the Prime Minister think that more efficient vetting machinery is required at No. 10, Downing Street, in the interests of truth, honesty and fairness?

The Prime Minister: I do not know how the hon. and learned Member relates his supplementary to the Question on the Order Paper, unless his suggestion is that in future messages on Labour Party matters should be dealt with by a civil servant paid out of the taxpayers' money.

Mr. Godfrey Nicholson: Will this officer include in his duties under the


Prime Minister the giving of the necessary help to explain away the indiscretions of members of the Cabinet?

ARGENTINE AND CHILE (BRITISH TERRITORY VIOLATIONS)

Major Tufton Beamish: asked the Secretary of State for Foreign Affairs if he will publish in the OFFICIAL REPORT full details of the exact nature and dates of the violations of British territory by the Argentine and Chile, together with the terms of all protests sent by His Majesty's Government and the replies received; and what further action will now be taken to protect British territory and establish British sovereignty in international law.

The Under-Secretary of State for Foreign Affairs (Mr. Ernest Davies): I propose to circulate in the OFFICIAL REPORT a list of the protests made together with the replies received, but since the documents concerned are numerous I am making the texts available in the Library.
As regards the second part of the Question, I have nothing to add to the statement made on 23rd April.

Major Beamish: Am I right in saying, in other words, that His Majesty's Government have no policy?

Mr. Davies: No, Sir. His Majesty's Government have made quite clear where they stand in this matter We have suggested that the matter should be referred to the International Court of Justice, but the opportunity of doing so has not yet been taken by Chile or the Argentine.

Mr. Nigel Fisher: Does the hon. Gentleman remember his right hon. Friend the present Foreign Secretary praising the late Mr. Bevin in this House for his Palmerstonian attitude in foreign affairs? Will he not now be a little more Palmerstonian himself in looking after British territory overseas?

Colonel J. R. H. Hutchison: When did the Government first refer this matter, or suggest referring it, to the International Court? How long ago was that?

Mr. Davies: The offer was made two years ago.

Commander Noble: Could the Minister say how long the offer will remain open?

Mr. Davies: There was no term fixed to the offer; it remains open indefinitely.

Mr. Mitchison: Does my hon. Friend observe the keenness of the Opposition to have a war with someone?

Mr. H. Hynd: Will my hon. Friend continue his efforts to settle this matter peacefully and try to curb the warmongers on the other side of the House?

Colonel Gomme-Duncan: In view of the fact that the International Court have no means of enforcing their decision, even if they reach one, and that there are very few of these people in British possessions, who could very easily be removed without any threat of war, why do we not do something?

Mr. Davies: Because the policy of His Majesty's Government remains the same. We wish to settle this matter by peaceful negotiation.

Mr. Fitzroy Maclean: We were told just a year ago that the Government were reviewing their whole Antarctic policy. Can the hon. Gentleman say what the result of that review has been?

Mr. Davies: This question is kept under constant review and there is no reason why the Government should depart from the policy which they have undertaken, which is to settle this, as I have said, by peaceful negotiation.

Following is the list:

Notes of protest addressed to Chile, concerning violations of U.K. Antarctic Territory, together with the replies received.

17th December, 1947—Mr. Leche to Sr. Vegara Donoso.

31st January, 1948—Sr. Vergara Donoso to Mr. Leche.

3rd April, 1951—Sir B. Jerram to Sr. Claro Velasco.

17th May, 1951—Sr. Walker Larrain to Sir B. Jerram.

Notes of protest addressed to Argentina, concerning violations of U.K. Antarctic Territory, together with the replies received.

7th April, 1943—Memorandum. Sir D. Kelly to Argentine Minister for Foreign Affairs.

11th September, 1945—Sir D. Kelly to Sr. Juan I. Cooke.

29th December, 1945—Sr. Juan I. Cooke to Sir D. Kelly.

15th February, 1947—Dr. Bramuglia to Sir R. Leeper.

17th December, 1947—Sir R. Leeper to Dr. Bramuglia.

23rd December, 1947—Sir R. Leeper to Dr. Bramuglia.

28th January, 1948—Dr. Bramuglia to Sir R. Leeper.

30th April, 1951—Sir H. Mack to Dr. Paz.

1st June, 1951—Dr. Paz to Sir H. Mack.

ORDNANCE FACTORY, PURITON (EXPLOSION)

Mr. Wills: (by Private Notice) asked the Minister of Supply whether he will make a statement on the explosion which took place at the Royal Ordnance Factory, Puriton, near Bridgwater, on the evening of 29th June.

Mr. G. R. Strauss: I regret that an accident occurred in a process building at the Royal Ordnance Factory, Bridgwater, at approximately 8.45 p.m. on Friday, 29th June, in which six employees lost their lives. This factory manufactures high explosives. A court of inquiry under His Majesty's Chief Inspector of Explosives is now being held. I take this opportunity of expressing my deep regret at the loss of life and my sympathy with the relatives of the employees who were killed.

Mr. Wills: I am sure that hon. Members will join with the Minister in expressing sympathy to the wives and relatives of the men who lost their lives in the performance of a duty which was of great value to us in this country.

Mr. Eden: Has the Minister any intention to make public the results of this inquiry?

Mr. Strauss: Usually, inquiries of this sort are not published because they are largely technical and often have a good deal of secret matter in them. It has not been the practice hitherto to publish them.

Mr. Eden: Would the Minister consider that point? According to my recollection, there have been inquiries the results of which have been made public. There is bound to be wide interest in this matter from every point of view and I cannot see any particular advantage in excessive secrecy.

Mr. Strauss: I agree, but I am advised that that has been the general rule in the past for those reasons—that the reports are highly technical and very largely secret. But if there is any general information I can give to the House when the inquiry is over I will certainly do so.

KOREA (CEASE-FIRE PROPOSAL)

Mr. Eden: (by Private Notice) asked the Secretary of State for Foreign Affairs whether he will make a statement with regard to a possible cease-fire in Korea.

Mr. Emrys Hughes: On a point of order. Is there not a Question already on the Order Paper on the subject—No. 70?

[Mr. EMRYS HUGHES,—To ask the Secretary of State for Foreign Affairs if he will now make a further statement on Mr. Malik's proposal to end the war in Korea.]

Mr. Speaker: It is somewhat different. The hon. Gentleman's Question referred to a Mr. Malik. This Question is a general one which, I gather, referred to communications which have taken place between General Ridgway and the two commanders on the other side. It is not the same question.

The Secretary of State for Foreign Affairs (Mr. Herbert Morrison): At 11 p.m. (Tokyo time) on 1st July, a message was broadcast in Chinese by the Peking radio addressed to General Ridgway, Commander-in-Chief United Nations Forces, and signed jointly by the Commanders-in-Chief of the North Korean forces and of the Chinese armies in Korea. One translation of this message reads: "We are authorised to tell you that we agree to suspend military activities and to hold peace negotiations and that our delegates will meet yours." Another translation of the same passage reads: "Having been empowered to do so we hereby declare that we agree to meet with your representatives to negotiate peace in order to cease hostilities and restore peace." Both versions of the message suggested that the meeting should take place in the Kaesong area on the 38th Parallel in the West of Korea between 10th and 15th July.
The message therefore appears to be in substance a response to General Ridgway's offer to discuss a cease-fire and His Majesty's Government welcome this development. It is expected that General Ridgway will send an affirmative reply to this message.
The discussions are for the moment concentrating (and in our view rightly) on the cease-fire which, I hope, will cover also arrangements for exchanges of prisoners, including civilians. It is the earnest hope of His Majesty's Government, not only that the cease-fire will be achieved but that the way will then be open to study other aspects of the Korean problem, including the relief of the distress caused to so many million Koreans in the last year.
We have full confidence in General Ridgway and I consider that it would be a mistake to indulge in too much public speculation on possible terms for the cease-fire.

Mr. Eden: I know that the House will respond to the Foreign Secretary's suggestion that we should not indulge in speculation about the terms. May I confine myself to associating this side of the House with what the right hon. Gentleman said about General Ridgway and to expressing our satisfaction at the suggestion that the question of the exchange of prisoners-of-war should, if possible, figure in the armistice terms?

Mr. Emrys Hughes: May I ask my right hon. Friend whether he agrees with me this time, that this is the best news we have had from Korea for over a year?

Mr. Morrison: It is a great pleasure, on this occasion, to agree with my hon. Friend.

Mr. Mikardo: Will my right hon. Friend do everything in his power, in collaboration with our Allies, to ensure that the hopes of a cease-fire are not prejudiced by indiscreet speeches and even indiscreet actions on the part of the South Korean Government?

Mr. Morrison: Yes, Sir; and I think on the part of everybody else as well.

Mr. Duncan Sandys: Can the right hon. Gentleman say what arrangements are being made to ensure that General Ridgway receives such political guidance

as may be necessary? Can he assure us that His Majesty's Government are in close consultation with the American Government on this question?

Mr. Morrison: We not only are in the closest touch, but we have been in the closest touch with the American Government. I think the right hon. Gentleman may safely assume that that aspect of the matter will be taken care of.

Mr. Sydney Silverman: Can my right hon. Friend say whether it is the case that the present proposals are being conducted between the military commanders on the basis that they are dealing with military security and a military cease-fire, and that politics do not for the moment enter into it?

Mr. Morrison: I think that would be right, Sir. It is a matter of fixing up the military circumstances of a cease-fire. Undoubtedly, political considerations will come into it later. If by any chance they should arise at this time machinery exists to deal with them, but I should have thought that for the moment it is mainly a matter between soldiers to fix the circumstances.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: As the acting Leader of the Opposition said, I think questions now can only do harm. I think we had better get on with the next business.

NATIONAL COAL BOARD (RECONSTITUTION)

The Minister of Fuel and Power (Mr. Philip Noel-Baker): With your permission, Mr. Speaker, and that of the House, I desire to make a statement about the National Coal Board.
The present appointments of the Chairman and of the full-time members of the National Coal Board will expire on 15th July.
When Lord Hyndley accepted the post as Chairman, in 1946, he made it clear to my predecessor that he could not promise to serve the full period for which the appointment was made. It has been only at the earnest request of the Government, and from a great sense of public


duty, that he has carried the heavy burden of the Chairmanship for the full term. He now retires, after many years of outstanding and devoted service to successive Governments, to the coal industry and to the nation. To him, and to the other members of the Board, I wish to express the thanks and appreciation of the Government for the great public service they have rendered in the immense task of organising and directing the affairs of the coal industry during the first five years of nationalisation.
Following Lord Hyndley's retirement, and in view of the change in the character of the Board that was explained to the House during the debates on the Amending Act of 1949, the Board will now be reconstituted as follows:

Chairman: Sir Hubert Houldsworth.
Deputy Chairmen: Mr. W. J. Drummond and Sir Eric Coates.
Full-time members: Mr. Ebby Edwards, Sir Charles Ellis, Sir Geoffrey Vickers and Sir Andrew Bryan.
Part-time members: Mr. J. H. Hambro, Sir Geoffrey Heyworth, Mr. Gavin Martin, Sir Godfrey Mitchell and Alderman Sidney Jones.


I propose to continue the present appointments till the end of July. The new appointments will, therefore, date from 1st August.

Mr. Brendan Bracken: We should wish for an opportunity of discussing these appointments, with the latest Report of the Coal Board. It will be within the recollection of the right hon. Gentleman that the former Leader of the House promised a day so that an opportunity could be given to the House to discuss the Coal Board's affairs, and I very much hope that it will be provided in the present Session, because the coal industry is still in most ways the most vital one of this country. I want, as one who has been very critical of Lord Hyndley, to say that I wish him all good fortune in his retirement. I wonder, on considering this list of appointments, whether Sir Eric Coates has been appointed to wind up the Coal Board as he was appointed to wind up the groundnut affairs. That is all the more reason why the Minister, in consultation with the Leader of the House, should give us an opportunity to discuss these matters, and I hope he will do so as soon as possible.

Mr. Noel-Baker: So far as I am concerned, I shall be very glad to have a discussion, but it is a matter for the Leader of the House.

Orders of the Day — FINANCE BILL

As amended, further considered.

New Clause.—(ALLOWANCE OF EXPLORATION EXPENDITURE.)

The following proviso shall be inserted after paragraph (a) of subsection (1) of section thirty of the Income Tax Act, 1945:
Provided that the rules shall not exclude from allowance under this Part of this Act any expenditure incurred (in respect of a mineral already worked) on searching for or on discovering and testing deposits or winning access thereto, on any mining tenures held or held under option or under an authority to prospect."—[Mr. H. Fraser.]

Brought up, and read the First time.

3.43 p.m.

Mr. Hugh Fraser: I beg to move, "That the Clause be read a Second time."
As the House is doubtless aware, this is the third occasion on which we on this side have attempted to draw the attention of the Chancellor of the Exchequer to the question of the production of more of these raw materials, and this discussion should be of further advantage to the Minister of Materials-designate.
This Clause is the precise implementation of the recommendations of the Millard Tucker Committee. It deals with the premise underlying the reasons for all mining and oil-seeking companies, that the task of exploration is a large part of their role. Indeed, the whole future of mining and oil production lies in the discovery of new sources of supply. I think that this point was high-lighted by the speech of the Minister of Materials-designate the other day, when he said that in 17 years the known sources of lead would be exhausted and that in 21 years the known sources of zinc also. I am very pleased to see the right hon. Member for Ebbw Vale (Mr. Bevan) in his place, because the other day he interrupted the speech of the Minister of Materials to ask him what the position was about exploration in this country.
I think that at the moment this exploration is the most important one in the present balance of raw materials throughout the world. I think it is also perfectly true to say that if the law which applies at this moment in this country had applied

throughout the world and throughout the world's history—if it had been adopted by all Governments—very few of the discoveries which the world has seen would have been made. I doubt, for instance, whether Sir Walter Raleigh would have sailed to the Orinoco to discover El Dorado, or whether the oilfields in Africa would have been found.
However, to revert to the exact situation as it is at the moment, the 1945 and 1949 Finance Acts laid down as a general principle that all capital expenditure made for the discovery of an oil well or mine —or, rather, for the working of an oil well or mine—should be allowable. Unfortunately, that principle has been more honoured in the breach than in the observance, and the fact is that, if one looks at what has happened since, one is struck by the fact that no allowance has been made for exploration—and let it be remembered that 90 per cent. of exploration proves abortive in the oil and mineral fields—unless it took place in the actual mineral field or oil province in which a company was already working.
This reading of the 1945 Act, as hon. and right hon. Gentlemen on the Treasury Bench are doubtless aware, was interpreted by a Treasury Order of 1947. Order No. 947 of 1947 interpreted the 1945 Act. Our contention is quite simply that the interpretation of the 1945 Act is not nearly liberal enough. If the Chancellor of the Exchequer has that Order with him and will look at it, he will find that allowances are permitted only on land being worked in the same mineral field or petroleum province.
When the 1947 Order was produced before this House there was, I think, no Prayer lodged against it. Perhaps in those days the Prayer mat had not yet become the symbol of the Allah of the Labour Government. The point is that the 1947 Order was drawn up, I think, by Treasury officials who had not fully consulted the oil-producing and mineral-producing industries.
If one examines the thing further to see what it means, one finds that companies are extremely limited in what they can do. Let us take, for example, the Anglo-Iranian Oil Company. Provided the Anglo-Iranian Oil Company continues its researches—if it is happy enough to remain in Persia—in that


petroleum province, it may write off the expenses undertaken, if they prove abortive, against its ordinary income, but if it goes outside the actual petroleum province it may not do so.
When this Order was drafted, I do not believe that it was clear to the Treasury what a petroleum province meant. In Egypt alone, there are two petroleum provinces; and if a company working the eastern petroleum field undertakes exploration in another field inside the same country, inside Egypt, and exploration proves abortive—and, as I say, some 90 per cent. of oil exploration is abortive —nothing may be written off against expenses.
Against that background the right hon. and learned Gentleman must recall the immense advantages given to American, Swiss, Belgian and other companies in this field. That applies equally to mineral deposits. The "same mineral field" is also liable to wrong interpretations. As the right hon. and learned Gentleman knows, this Treasury Order was probably drafted bearing in mind the type of coalfield which we have in this country, where a seam might run for hundreds of miles. But I am told that in mining there are often found outcrops of a precious lode or vein of metal, which means that in two comparatively adjacent geographical areas there may be two completely different mineral fields.
It follows that in development in Africa, for example, one company mining in the Orange Free State may, if it is a British company, find itself unable to write off expenditure undertaken in a fairly near area because that does not happen to be in the same mineral field. We on this side of the House believe strongly that the Government should introduce—and they can introduce quite simply by the withdrawal of this Order, No. 947—mining taxation which will help exploration by British oil companies and mining companies throughout the world.
As the present law stands, this immense handicap is imposed on all British-controlled oil-getting and mining companies. In previous speeches I have drawn the attention of the Treasury Bench to the immense advantages enjoyed by American and by other overseas companies. It is really time for us in this country to see that our companies are at least advantaged in

the same way as industrial companies. The case put forward on previous occasions against this type of allowance was that abortive expenditure was an attempt to acquire a new capital asset, and was therefore a mere failure which should be written off. In mining and oil-getting precisely the same objective is pursued as is pursued by the industrialist, that is, a continuation of production. If I, as a cotton spinner, acquire a new machine which proves to be out-of-date and that expenditure is abortive, I can continue to write off the cost of that machine which I acquired over a period of years, even if I do not use it.
In precisely the same way that rule should apply to these mining and oil-getting concerns of ours which in the past have brought much revenue and raw materials to this country, if oil-getting or mining companies are to continue to find new resources which can be put to the benefit of the company and of this country. Even at this very moment there are two companies exploiting, or about to exploit, resources within the British Isles. Both those companies are American. In Derbyshire inquiries are being made by one of the largest American mining houses as to whether or not they should there develop Britain's lead. Even at this moment in Southern Ireland American companies are working on the production of raw materials—I am not sure which non-ferrous metals; it may be either zinc or lead.
The time has come for us to see things as they should be, which is to give to our mine-creating and oil-well-creating companies the same sort of advantage as other companies are getting. In the past we have run over the wide gamut of the immense advantages that American companies have over ours. The House has been alerted by speeches of the Minister of Materials-designate, of the right hon. Member for Ebbw Vale (Mr. Bevan) and of others showing that this country is in grave danger unless we can control and use the resources which are ours by right throughout the vast area of the globe.
Taxation is so weighted against the British explorer, the British company which goes in for wide-scale exploration throughout the world, that there is great danger that in the next 20 years we shall see a diminution of those raw materials and profits which should flow into this


country. On the last two occasions when new Clauses of this nature have been considered, we have not sought to divide the House, but unless the Minister who is responsible for answering can give us some satisfaction, I really believe that we shall now be forced to do so.

Sir Edward Boyle: I beg to second the Motion.
Since last Thursday night, when it fell to me to propose a new Clause which also dealt with the effect of the tax structure on mining concerns, the Attorney-General has been on an important journey. I am sure we all hope that the patience and courtesy which he has shown throughout the debates on the Finance Bill have also fortified him during the even more exacting task that he has had to carry out during the weekend.
This Clause, the Motion for the Second Reading of which has been so ably moved by my hon. Friend the Member for Stafford and Stone (Mr. H. Fraser), is based on the clear recommendation of paragraph 240 of the Millard Tucker Report. That recommendation is repeated in the summary which appears at the end of the Report. I mention that because when I moved a new Clause last Thursday night the right hon. and learned Gentleman pointed out, with some justice, that the effects of paragraph 238 of the Report are slightly modified by another paragraph. But in this case the recommendation in paragraph 240 is absolutely clear, and is not qualified by any paragraph elsewhere in the Report.
I only wish to make two other points. The first is to answer what is, I think, the stock argument against this Clause, namely, that abortive expenditure on exploration is really a loss sustained in an attempt to create a completely new capital asset. That argument does not take into account the particular problems which a company such as an oil company has to face. An oil company must always be all the time on the look-out for new deposits, wherever they are to be found.
I should like to dispose of the objection that some loss might be sustained by the Inland Revenue. The point here is that one has to take into account what was said by my hon. Friend the Member for Chippenham (Mr. Eccles) last Thursday

night, namely, that the Revenue could not possibly gain if, as a result of our tax structure, a mine is sold to some nonresident company. For a country like Great Britain, which is dependent on imports of raw materials, it is surely absolutely vital that United Kingdom mining concerns should be able to compete on level terms with mining companies in foreign countries. It is quite understandable that the Inland Revenue should be suspicious of any innovations that are proposed in our tax structure, but we on this side of the House think that the regulations of the Inland Revenue, and our financial legislation generally, must always be sensitive to the ever-changing climate of Britain's economic needs. It is for these reasons that I earnestly commend this Clause to the attention of the House.

The Attorney-General (Sir Frank Soskice): As the hon. Members who have moved and seconded the Motion for the Second Reading of the new Clause have pointed out, the Clause deals with a subject which was considered by the Millard Tucker Committee. We feel that, as in the case of previous new Clauses and Amendments which we have discussed, it really would not be feasible to deal with the new Clause without paying attention to the wider implications involved. As both hon. Gentlemen have pointed out, the two rival considerations which have to be considered one against the other in deciding whether or not to accept a proposal of this sort are as follows.
4.0 p.m.
As against an allowance for this kind of expenditure, it is said that it is expenditure which is devoted to the creation of a new capital asset and therefore cannot, consistently with our taxation structure, be a fit subject for an allowance. On the other hand, it is pointed out that, especially in the case of oil companies and companies concerned with the extraction of mineral wealth, if a particular source of mineral wealth is likely to come to an end, as it must do at some time or another, the companies must concern themselves with looking about for other possible sources, unless their enterprise is to be stopped altogether.
In weighing these considerations one against the other, the Millard Tucker Committee came to the conclusion that


the existing limit on which we work is too narrow and needs widening. They were, however, if I may say so, not very specific in the proposals they made in regard to it, or perhaps it would be truer to say that they recognised that a proposal with regard to oil and mineral companies was one which did not stand quite alone.
It was pointed out, and it was, indeed, the subject of discussion, that expenditure on exploration stood on very much the same footing as expenditure which a concern might embark upon with a view to widening its undertaking. In any enterprise it is, of course, often necessary to consider whether it is prudent and proper to embark on expenditure for the purpose of attempting to expand into new fields. That kind of expenditure—abortive capital expenditure as it will turn out to be sometimes, although, of course, it sometimes results in a successful return—really stands on much the same footing as this exploration expenditure.

Mr. H. Fraser: The right hon. and learned Gentleman has referred to the Millard Tucker Committee. I think that they are very specific in what they say. They state, in their final conclusion in paragraph 240, in black type,
…We accordingly recommend that exploration expenditure should be allowed provided it is incurred in searching for a mineral which the company is already working.

The Attorney-General: That is perfectly true. But if the hon. Gentleman will look at the beginning of the same sentence, he will find that they say:
We have come to the conclusion that the present limitation is too narrow having regard to our subsequent observations on the subject of abortive capital expenditure generally (see paragraph 263 below)…
So they do link their recommendation with the question of abortive capital expenditure in general. Indeed, as a matter of logical approach, it is difficult to divide one from the other. The company engaged in extracting mineral wealth and desiring to open up a deposit elsewhere in the world stands on much the same footing as a concern which operates, say, in London and is considering whether it should or should not embark on a plan of capital expenditure with a view to opening a branch, say, in Amsterdam.
One cannot logically dissociate exploration expenditure incurred by way of mineral expansion from the general question

of extending other concerns. For these reasons, having heard the arguments addressed to the House, we think that we ought not to try to deal with this matter until it has received further consideration. We hope that it may be considered by the Royal Commission in order that the implications involved of making an allowance in regard to this type of expenditure can be fully weighed. I urge on the House that we ought not, at this stage, to accept this Clause, dealing as it does with only a limited field of property, but we ought to see whether the Royal Commission make any recommendations, and, if so, what recommendations, with regard to the whole field of this expenditure, before we come to any decision. For these reasons, I hope that the Clause will be rejected.

Mr. David Eccles: I do not think that the Attorney-General has given enough weight to the peculiar nature of mining. As the right hon. and learned Gentleman said, this is not like other industries. A mine is a wasting asset. It is of great importance to keep the staff together and to make use of their technical skill by carrying on operations in new fields. For the right hon. and learned Gentleman to tell us that this matter must wait until the Royal Commission has reported is really to put off a concession for an indefinite period—it may be for years—which we feel ought to be given now.
The trouble arises because, as my hon. Friends have said, the definition of "source" is too narrow under the law as it stands. The definition, referring as it does to a mineral field or petroleum province, is alright for the other kind of allowances but it is not wide enough when it comes to exploration. There are two main kinds of mineral ore bodies: there is the regular reef, like jam in a sandwich, and it is quite easy to say that wherever that reef is, then it belongs to one mineral field and one only. In other instances where erosion has taken place in the occurrence of the ore, the payable areas are much more like plums in a cake than jam in a sandwich, and it takes a lot of time, trouble and money to discover another plum.
I understand that in Wales two lead occurrences only 50 miles away have been ruled out as not being of the same mineral field and therefore the allowance is not


given to the operating company to go after the other deposit. I am sure that is a mistake. On the broader aspect, the world is steadily becoming surveyed for mineral wealth and companies which are coming to the end of their deposits have to go far afield. It must be right not to limit their exploration to the deposit or oil structure on which they happen to be working.
Further, it is desirable to encourage the use of profits, which successful companies are earning, in the risky business of looking for a new deposit. We are getting short of risk capital, and here is an opportunity of engaging the profits that are retained in a successful company in a search for other ore bodies. I think that two examples will suffice. I understand that the great Australian companies which are predominent in the field of lead and zinc are anxious to use some of their profits to look for other lead and zinc bodies. It must be a good thing that they should do so.
There is also the question of the oil reserves in Trinidad which are by no means unlimited. Are the Trinidad companies not to be able to claim an allowance on money which they might spend in exploration in Venezuela? It is not difficult to send geologists by aeroplane from Trinidad to Venezuela but the money spent does not rank for an allowance. The Government are unwise to hang this concession up. I take it from the Attorney-General's speech that they will give in one day but they do not want to give in now.
My final plea is to reinforce what my hon. Friends have said. Foreign companies do not get an allowance in this form but they get bigger allowances for mining oils and minerals than our companies do, and we ought to put our own overseas companies at least on a level with the foreign companies. Therefore, I ask the right hon. and learned Gentleman to give us a definite assurance that the Government accept the principle of this Clause and that they will not wait an indefinite number of years before they bring it on to the Statute Book.

Mr. Aneurin Bevan: My right hon. and learned Friend always makes his speeches in so persuasive a manner that it almost feels like an offence to get up to disagree with him at all: but I cannot help believing that

my right hon. and learned Friend is being charged in this matter with work that ought to fall upon other shoulders. We are not dealing only with the local point. We are dealing with something which is very important indeed in its bearing on our physical assets.
I take the view, and I have always taken the view, that if there is a social purpose to be accomplished of any importance, either the State should do it or the State should make it possible for private enterprise to do it; but what the State should not do is to be inert and to surround private enterprise with such inhibitions that private enterprise cannot do it. Here is a characteristic example. It is also an illustration of the unwisdom of allowing the Treasury to have too much influence over economic planning.
It is obvious from the attitude of the Government Front Bench today that Revenue considerations are overlaying other physical considerations. This happens over and over again. That is why, in a recent statement to the House, which was not received with universal approbation, I suggested that there should be a division between economic planning throughout the country and the responsibilities of the Treasury, and that it was a mistake to make the Treasury responsible for economic planning as a whole. But here we have it.
It is surely obvious to the Government that we are in a very very dangerous situation in this country. Our dependence upon raw materials is not decreasing: it is increasing. It is increasing at a time when it is becoming more and more difficult to find beds, seams or lodes of precious materials. Therefore, no one in this field should be suffering financial inhibitions. It is a fact, as I said in an intervention the other day, that Great Britain has not yet been properly explored by modern methods of exploration. It is an extraordinary thing but, as usual, a fool's eyes are upon the ends of the earth, and we are going all over the world looking for raw materials when many of these raw materials might be under our feet if we had a proper exploration for them by modern methods of investigation—and modern methods of investigation are expensive.
I have consulted geologists, mineralogists and physicists on this matter, and,


as far as I know, there is no way of effectively finding out what is under our feet except by boring and by examining the results of boring.

Earl Winterton: Surely, it is not true to say that there has been no improvement in scientific methods in recent years. As a matter of fact, as the right hon. Gentleman is probably aware, there has been boring for oil in the south of England at great depth.

Mr. Bevan: I did not say that there had not been any improvement. On the contrary, there is no doubt that modern scientific methods of exploration are by boring and not by the old crude methods; and they have not been used in Great Britain to the extent that they should. I do not believe that, even up to today, proper borings have been done in the granite masses of Cornwall. Certainly they have not been done in North Wales to anything like the extent they should, and they have not been done in the Peak district. I challenge anyone to say that that is untrue.
4.15 p.m.
Why have they not been done? It may be because private enterprise in Great Britain is no longer as energetic as it was; it may be that private enterprise is suffering from the financial inhibitions that this Clause is aimed at, or it may be that the State has not been sufficiently active. But what we do know is that there is not a proper investigation of our mineral wealth with the urgency that the crisis demands. Either the financial inhibitions should be removed in order that private enterprise should get ahead with it, or the Government should do it—and the Government are not doing it. In fact, I assert now that even today the Government have not armed themselves with sufficient legislative power to do the job properly.
In the circumstances, it seems to me deplorable that we should be considering a financial risk upon British industry which is not imposed upon their rivals in other countries. It is intolerable in the circumstances; and I say that it is not enough for the Government to come forward and put a conventional Revenue argument, because one cannot compare factory production with mineral extraction. Surely, it is becoming increasingly

obvious that the conveyor belt, the techniques of modern repetitive production, have long ago run ahead of the possibilities of mineral extraction.
Unless those two can be brought together, the conveyor will go slower, it will stop and come to an end and have to wait until the extractive industries have caught up. It seems to me also that it is not a good thing that this financial power of investigation should be left only in the hands of great companies. Great oil companies may be able to afford to risk money, but smaller companies cannot do it at all. They are entirely inhibited.
It seems to me that this is a case for an urgent re-examination to see whether we cannot bring our fiscal methods into line with our physical needs, and not leave it to the exploration of a Royal Commission, because in the meantime other nations may have explored and brought about the results which the Royal Commission itself will not be able to enable us to achieve. I cannot go into the Lobby in support of this new Clause, for obvious reasons. I hope, however, that my right hon. and learned Friend will represent to the Chancellor that we do not consider that England's urgent needs for raw materials should wait upon the dilatory methods of a Royal Commission.

Captain Crookshank: I hope that we can spare the right hon. Gentleman the Member for Ebbw Vale (Mr. Bevan) any embarrassment by not taking this matter too far this afternoon. It is a pity in a way that the Government were so anxious to get to bed on Thursday that they did not allow us to discuss this new Clause with the previous new Clause. That would have tidied up the debate on this general issue of mining exploration. Unfortunately, we are back at it today. I think it is clear that the House is much indebted to my hon. Friend the Member for Stafford and Stone (Mr. H. Fraser) and the hon. Member for Handsworth (Sir E. Boyle) for having persistently, throughout our debates, put down one Amendment after another to pinpoint this important issue.
While the Government today, as on previous occasions, have not felt it possible to say that they will accept this new Clause here and now, it is obvious, particularly in the light of the speech by the right hon. Member for Ebbw Vale, that we shall have to do all we can during


the coming months or years, either by financial alleviation or otherwise, to get on with the exploration of the minerals in this country or elsewhere under British leadership. I think that we all agree about that. I hope that the Government will agree with us in that argument. Our consciences are clear. We have brought the matter before the House and the Government have refused to do anything this year. Be that on their own heads.
I shall be very surprised if, long before we come to the next Finance Bill, the new Minister of Materials has not been stirring in this matter. It may be that before we have the Budget opened next year some amending Income Tax Bill will be necessary to deal with this very problem which is becoming more and more urgent every day.
This Clause seeks to deal with the problem in a different way from the new Clause which we discussed the other night. Here we are asking for permission for allowances in regard to expenditure incurred on search and discovery. That was not what we were talking about the other night, but the whole aim of all our proposals was to make a basis for exploratory work to be done. I therefore hope that, in spite of what the Attorney-General had to say, obviously not as being the responsible Minister either for finance or for the metals, but simply as the spokesman of the Government, the matter will be considered urgently by his colleagues.
I should have preferred him to give us a little better undertaking than he did. He pointed out that the Millard Tucker Report said that the present limit was too narrow, and, of course, as on other Clauses of this Bill, our proposals have been put down to deal with what the Millard Tucker Report said on one point after another. On this occasion, the Government have announced that we have to consider these matters together, and that they cannot concede first one thing and then another. So be it; but to go further and say that we have to wait for the Report of the Royal Commission on Income Tax is putting the matter far too long ahead, unless it is envisaged that the Royal Commission will report in sections and that this will be the first section to be dealt with.

The Attorney-General: Will the right hon. and gallant Gentleman allow me to intervene to say, in answer to him and to my right hon. Friend, that perhaps I was rather too pessimistic in saying that we would have to wait for the Royal Commission to report. I should prefer the House to accept the assurance that we want to consider this as we have considered the other recommendations of the Millard Tucker Committee. It does not necessarily mean that one has to wait for the Royal Commission to report. We want to have the opportunity of considering the matter a good deal further in relation to the full implications regarding other forms of expenditure which are of necessity involved, and I should like to amend what I said before by leaving out, as it were, the reference to the Royal Commission. We need not necessarily wait for it, but we have to consider this matter in conjunction with other recommendations of the Millard Tucker Committee.

Captain Crookshank: That statement goes further towards what we wanted than anything which we understood either on Thursday night or today. Even the most dilatory Government ought not to take over a year to go through the implications of the Millard Tucker Report, and we may very well have legislation in the autumn to deal with this problem. If something like that eventuated, it would be very good, because obviously the Report stage of the Finance Bill is a difficult time at which to raise new issues of this kind, or, indeed, some of the other points to which we shall be giving attention later on today.
I think this is certainly an advance on what we have heard before, but I still reinforce the plea made by my hon. Friends that this is really a very important matter, even though we have only discussed it rather broadly late on Thursday and again at the beginning of a rather heavy day today. It is a much more important matter than possibly many hon. Members appreciate.
Now we are told that it is to be considered in relation to other Millard Tucker recommendations, irrespective of and in anticipation of, though without waiting for, anything that may emerge from the Royal Commission on Income Tax. This is something far more than I had expected from the Government when


the debate started, and, though I still feel that that will not be enough, I think that the Government ought to be most grateful to my hon. Friend for having brought forward the matter today.

Mr. Harold Davies: I am sure that many of us on both sides of the House are grateful to the hon. Member for Stafford and Stone (Mr. H. Fraser) for his persistence in putting forward these arguments which, I am quite sure, he has not pressed forward from any party political point of view, but from the real necessity of getting the country to bring its mind to bear upon this problem of exploration and further development of raw materials.
We have been told that the new Minister of Materials will do everything possible to ensure adequate supplies of the materials with which he is concerned, and we are also told that, where appropriate, he will take steps to increase the production of materials the supplies of which are or may become inadequate, to promote their economical use, salvage and recovery and to develop their production. I think that this is a Clause in keeping with the White Paper which we discussed the other day.
Some weeks ago, I asked the Minister of Supply what the Government were doing to encourage a review of the discoveries of copper on the borders of Leek and Stafford and the mining of copper and lead in those areas. From about 1830 to about 1850, the Ecton Copper Mine was one of the largest in the world, and I believe that, as my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) said, with more modern exploration and scientific methods, we might once more win these raw materials. Such a proposal as this, if conceded by the Treasury, would encourage private enterprise to go on with these developments.
Of what use is it either to have a gold balance or a dollar balance if vital raw materials are lacking? It is because I believe that this proposal would encourage the development of these raw materials that I have pleasure in supporting the hon. Member for Stafford and Stone in asking the Minister to make some concession with regard to this proposed Clause.

Captain Waterhouse: I should like to intervene for a few moments in this debate, because these

matters are near to my heart. The hon. Member for Leek (Mr. Harold Davies) has referred to the Ecton Mine. Far more recently than that, in Derbyshire, the great Mill Close Mine was working between the wars producing more lead than any other lead mine in Europe. The hills in Derbyshire are still full of lead, but it is extremely difficult and expensive to get it out. Boring, of course, will not meet the case with lead. One has got to get down to the rubble and drive very hard through millstone and in many directions before one strikes the lead. Even when one does strike the lead, if the Government insist on taking so large a share of what is produced, without giving an adequate allowance for the expenditure incurred, the hope is small indeed of ever getting private enterprise to do anything at all.

Mr. Harmar Nicholls: I should like to add one or two words to the forceful arguments which have already been put to the House. I feel that the real importance of the subject has not yet been grasped either by the House or by the people of the country, and this is an occasion on which the Executive would do well to take heed of the opinions expressed in the House. The Attorney-General has accepted all the arguments put forward by my hon. Friends, and since his statement we have had the urgency of the matter reiterated by the right hon. Member for Ebbw Vale (Mr. Bevan).
In view of the fact that this is a matter which strikes at an important factor in the future of this country, I suggest that now is the time for dealing with it. I feel that the explanation which the right hon. and learned Gentleman gave—that this matter could not be dealt with because there were many other recommendations of the Millard Tucker Report to consider—was a rather weak one.
This is a recommendation which stands completely on its own, and which would not affect any other proposal for implementing any other part of that Report which the Government might want to do in the near future. In order to underline the importance of this subject, I hope that the Government will have second thoughts on the matter, and will take this particular recommendation out of the Report and do something about it now.

4.30 p.m.

Sir Harold Roper: The right hon. Member for Ebbw Vale (Mr. Bevan) mentioned the need for prospecting for non-ferrous metals in the granite masses of Cornwall. This is a subject in which I have interested myself closely, and I have heard strong opinions expressed by experts who believe that there are great possibilities there. Some hon. Members will have heard Professor W. R. Jones, who recently addressed the Parliamentary and Scientific Committee in this House. After his address, I asked him his views about the prospects in Cornwall and he replied that tin mining in Cornwall would continue long after the main deposits in Malaya were finished. That is a very important statement and I hope that the Government Front Bench will take note of it.
Over the weekend I have been discussing wolfram with an expert who is firmly of the opinion that there is undeveloped wolfram in this country. We must not overlook this important possibility. Minerals are believed to be present, but what is holding back development more than anything else is that the pattern of taxation is wrong. Whatever the best solution may be, I hope that the Treasury Bench will consider carefully before they reject the proposed Clause.

Mr. Hayman: I should like to emphasise the point made by my right hon. Friend the Member for Ebbw Vale (Mr. Bevan) when he said that he hoped that whatever concessions were made in the matter of taxation would be given to small companies as well, as to large ones. I believe that much of the mineral wealth of Cornwall which may still exist can best be tapped by small enterprises rather than by large ones.

Mr. H. Fraser: I am sure we are all very glad to see that the Minister of Materials-designate is now here. It might have been happier if the answer to the right hon. Member for Ebbw Vale (Mr. Bevan) had come from—

Mr. Speaker: The hon. Gentleman cannot speak again. He has no right to make a second speech.

Mr. Fraser: In view of the unsatisfactory legal answer that we have had, I propose to divide the House on the Clause.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 240; Noes, 276.

Division No. 158.]
AYES
[4.35 p.m.


Aitken, W. T.
Clarke, Col. Ralph (East Grinstead)
Fraser, Hon. Hugh (Stone)


Amery, Julian (Preston, N.)
Clarke, Brig. Terence (Portsmouth, W.)
Fraser, Sir I. (Morecambe &amp; Lonsdale)


Amory, Heathcoat (Tiverton)
Colegate, A.
Fyfe, Rt. Hon. Sir David Maxwell


Arbuthnot, John
Cooper, Sqn. Ldr. Albert (Ilford, S)
Galbraith, Cmdr. T. D. (Pollok)


Ashton, H. (Chelmsford)
Cooper-Key, E. M.
Galbraith, T. G. D. (Hillhead)


Assheton, Rt. Hon. R. (Blackburn, W.)
Corbett, Lt.-Col. Uvedale (Ludlow)
Gammans, L. D.


Astor, Hon. M. L.
Craddock, Beresford (Spelthorne)
Garner-Evans, E. H. (Denbigh)


Baker, P. A. D.
Cranborne, Viscount
Glyn, Sir Ralph


Baldock, Lt.-Cmdr. J. M
Crookshank, Capt. Rt.- Hon. H. F. C
Gomme-Duncan, Col. A.


Banks, Col. C.
Crouch, R. F.
Gridley, Sir Arnold


Baxter, A. B.
Crowder, Capt. John (Finchley)
Grimston, Hon. John (St. Albans)


Bell, R. M.
Crowder, Petre (Ruislip—Northwood)
Grimston, Robert (Westbury)


Bennett, Dr. Reginald (Gosport)
Cundiff, F. W.
Hare, Hon. J. H. (Woodbridge)


Bennett, William (Woodside)
Cuthbert, W. N.
Harris, Frederic (Croydon, N.)


Bevins, J. R. (Liverpool, Toxteth)
Darling, Sir William (Edinburgh, S.)
Harris, Reader (Heston)


Bishop, F. P.
Davidson, Viscountess
Harvey, Air Codre. A. V. (Macclesfield)


Black, C. W.
Davies, Nigel (Epping)
Harvey, Ian (Harrow, E.)


Boles, Lt.-Col. D. C. (Wells)
de Chair, Somerset
Harvie-Watt, Sir George


Bossom, A. C.
De la Bère, R.
Head, Brig. A. H.


Boyd-Carpenter, J. A
Deedes, W. F.
Heald, Lionel


Boyle, Sir Edward
Dodds-Parker, A. D.
Hicks-Beach, Maj. W. W


Bracken, Rt. Hon B.
Donner, P. W.
Higgs, J. M. C.


Braine, B. R.
Douglas-Hamilton, Lord Malcolm
Hill, Mrs. E. (Wythenshawe)


Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)
Drewe, C.
Hill, Dr. Charles (Luton)


Bromley-Davenport, Lt.-Col, W.
Dugdale, Maj. Sir Thomas (Richmond)
Hirst, Geoffrey


Browne, Jack (Govan)
Duncan, Capt. J. A. L
Hope, Lord John


Buchan-Hepburn, P. G. T.
Dunglass, Lord
Hopkinson, Henry


Bullock, Capt. M
Duthie, W. S.
Hornsby-Smith, Miss P.


Bullus, Wing Commander E. E.
Eecles, D. M.
Horsbrugh, Rt. Hon. Florence


Burden, F. A.
Eden, Rt. Hon. A.
Howard, Gerald (Cambridgeshire)


Butcher, H. W.
Elliot, Rt. Hon. W. E
Howard, Greville (St. Ives)


Carr, Robert (Mitcham)
Fisher, Nigel
Hudson, Sir Austin (Lewisham, N.)


Channon, H.
Fort, R.
Hudson, Rt. Hon. Robert (Southport)


Churchill, Rt. Hon. W S
Foster, John
Hudson, W. R. A. (Hull, N.)




Hurd, A. R.
Morrison, John (Salisbury)
Spearman, A. C. M.


Hutchinson, Geoffrey (Ilford, N.)
Morrison, Rt. Hon. W. S (Cirencester)
Spence, H. R. (Aberdeenshire, W.)


Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Mott-Radclyffe, C. E
Spens, Sir Patrick (Kensington, S.)


Hutchison, Col. James (Glasgow)
Nabarro, G
Stanley, Capt. Hon. Richard (N. Fylde)


Hyde, Lt.-Col. H. M.
Nicholls, Harmar
Stevens, G. P.


Jennings, R.
Nicholson, G.
Steward, W. A. (Woolwich, W.)


Johnson, Howard (Kemptown)
Noble, Cmdr. A. H P
Stewart, Henderson (Fife, E.)


Jones, A. (Hall Green)
Nugent. G. R. H.
Stoddart-Scott, Col. M


Joynson-Hicks, Hon. L. W.
Nutting, Anthony
Storey, S.


Kerr, H. W (Cambridge)
Oakshott, H. D.
Strauss, Henry (Norwich, S.)


Lambert, Hon. G
Odey, G. W.
Stuart, Rt. Hon. James (Moray)


Langford-Holt, J.
Ormsby-Gore, Hon. W. D.
Studholme, H. G.


Law, Rt. Hon. R. K.
Orr, Capt. L. P. S.
Summers, G. S


Leather, E. H. C.
Orr-Ewing, Charles Ian (Hendon, N,)
Sutcliffe, H.


Legge-Bourke, Maj. E. A. H
Orr-Ewing, Ian L. (Weston-super-Mare)
Taylor, Charles (Eastbourne)


Lindsay, Martin
Osborne, C.
Taylor, William (Bradford, N.)


Linstead, H. N
Perkins, W. R. D.
Teeling, W.


Llewellyn, D.
Peto, Brig. C. H M
Thompson, Kenneth Pugh (Walton)


Lloyd, Rt. Hn. G. (King's Norton)
Pickthorn, K.
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Lloyd, Maj. Guy (Renfrew, E.)
Pitman, I. J.
Thorneycroft, Peter (Monmouth)


Lloyd, Selwyn (Wirral)
Powell, J. Enoch
Thornton-Kemsley, Col. C N.


Lockwood, Lt.-Col. J. C.
Price, Henry (Lewisham, W)
Thorp, Brigadier R. A. F


Longden, Gilbert (Herts, S.W.)
Prior-Palmer, Brig. O
Tilney, John


Lucas, Sir Jocelyn (Portsmouth, S.)
Profumo, J. D.
Touche, G. C.


Lucas, P. B. (Brentford)
Raikes, H. V.
Turner, H. F. L


Lucas-Tooth, Sir Hugh
Rayner, Brig. R
Turton, R. H.


McAdden, S. J.
Redmayne, M.
Vane, W. M. F.


McCorquodale, Rt. Hon. M. S.
Remnant, Hon. P
Vosper, D. F.


Macdonald, Sir Peter (I. of Wight)
Renton, D. L. M
Wakefield Edward (Derbyshire, W)


Mackeson, Brig. H. R.
Roberts, Maj. Peter (Heeley)
Wakefield, Sir Waveil (Marylebone)


McKie, J. H. (Galloway)
Robertson, Sir David (Caithness)
Walker-smith, D. C.


Maclay, Hon. John
Robinson, Roland (Blackpool, S.)
Ward, Hon. George (Worcester)


Maclean, fitzroy
Robson-Brown, W.
Word, Miss I. (Tynemouth)


MacLeod, lain (Enfield, W.)
Rodgers, John (Sevenoaks)
Waterhouse, Capt. Rt. Hon. C


Macpherson, Major Niall (Dumfries)
Roper, Sir Harold



Maitland, Cmdr. J. W.
Ropner, Col. L.
Watkinson, H.


Manningham-Buller, R. E
Russell, R. S.
Wheatley, Maj. M. J. (Poole)


Marlowe, A. A. H
Ryder, Capt. R. E. D.
White, Baker (Canterbury)


Marples, A. E.
Salter, Rt. Hon. Sir Arthur
Williams, Charles (Torquay)


Marshall, Douglas (Bodmin)
Sandys, Rt. Hon. D.
Williams, Gerald (Tonbridge)


Marshall, Sidney (Sutton)
Savory, Prof. D. L.
Williams, Sir Herbert (Croydon, E.)


Maude, Angus (Ealing, S)
Scott, Donald
Wills, G.


Maude, John (Exeter)
Smithers, Peter, (Winchester,)
Wilson, Geoffrey (Truro)


Maudling, R.
Smithers, Sir Waldron (Orpington)
Winterton, Rt. Hon Earl


Medlicott, Brig F
Smyth, Brig. J. G (Norwood)
Wood. Hon R


Mellor, Sir John
Snadden, W. McN



Molson, A H E
Soames Capt C
TELLERS FOR THE AYES:




Major Conant and Mr. Digby.




NOES


Acland, Sir Richard
Burke, W. A
Dye, S.


Adams, Richard
Burton, Miss E.
Ede, Rt- Hon J C


Albu, A. H.
Butler, Herbert (Hackney, S.)
Edelman, M.


Allen, Arthur (Bosworth)
Callaghan, L. J
Edwards, John (Brighouse)


Allen, Scholefield (Crewe)
Carmichael, J.
Edwards, Rt. Hon. Ness (Caerphilly)


Anderson, Alexander (Motherwell)
Castle, Mrs. B. A
Edwards, W. J. (Stepney)


Anderson, Frank (Whitehaven)
Champion, A. J
Evans, Albert (Islington, S.W)


Attlee, Rt. Hon C R
Chetwynd, G. R
Evans, Edward (Lowestoft)


Awbery, S. S
Clunie, J.
Evans, Stanley (Wednesbury)


Ayles, W. H.
Cocks, F. S.
Ewart, R.


Bacon, Miss Alice
Coldrick. W
Fernyhough, E.


Baird, J
Collick, P.
Field, Capt. W. J


Balfour, A.
Cook, T. F.
Fletcher, Eric (Islington, E)


Barnes, Rt. Hon A. J
Cooper, Geoffrey (Middlesbrough, W.)
Follick, M.


Bartley, P.
Cooper, John (Doptford)
Foot, M. M


Bellenger, Rt. Hon. F. J
Cove, W G.
Forman, J. C


Benn, Wedgwood
Craddock, George (Bradford, S.)
Fraser, Thomas (Hamilton)


Benson, G.
Crawley, A.
Freeman, Thomas (Hamilton)


Beswick, F.
Crosland, C. A. R
Freeman, Peter (Newport)


Bevan, Rt. Hon. A. (Ebbw Vale)
Crossman, R. H. S
Gaitskell, Rt. Hon. H. T. N


Bing, G. H. C.
Cullen, Mrs A
Ganley, Mrs. C. S.


Blenkinsop, A.
Daines, P.
George, Lady Megan Lloyd


Blyton, W. R
Dalton, Rt. Hon. H
Gibson, C. W.


Boardman, H
Darling, George (Hillsborough)
Gitzean, A.


Booth, A.
Davies, A. Edward (Stoke, N)
Glanville, James (Consett)




Gooch, E. G.


Bottomley, A. G
Davies, Ernest (Enfield, E)
Gordon-Walker, Rt. Hon. P C.


Bowden, H. W.
Davies, Harold (Leek)
Greenwood, Anthony (Rossendale)


Bowles, F. G. (Nuneaton)
de Freitas, Geoffrey
Greenwood, Rt. Hon. Arthur (Wakefield)


Braddock, Mrs. Elizabeth
Deer, G.
Grenfell, Rt. Hon. D. R.


Brockway, A. F.
Delargy, H. J.
Grey, C. F.


Brook, Dryden (Halifax)
Diamond, J.
Griffiths, David (Rother Valley)


Brooks, T. J. (Normanton)
Dodds, N. N.
Griffiths, Rt. Hon. James (Llanelly)


Broughton, Dr. A. D. D
Donnelly, D.
Griffiths, W. (Manchester Exchange)


Brown, Thomas (Ince)
Dugdale, Rt. Hon. John (W. Bromwich)
Gunter, R. J.







Haire, John E. (Wycombe)
Mackay, R. W. G. (Reading, N.)
Simmons, C. J.


Hale, Joseph (Rochdale)
McLeavy, F.
Slater, J.


Hale, Leslie (Oldham, W.)
MacMillan, Malcolm (Western Isles)
Smith, Norman (Nottingham, S.)


Hall, Rt. Hon. Glenvil (Colne Valley)
McNeil, Rt. Hon. H.
Snow, J. W.


Hall, John (Gateshead, W.)
MacPherson, Malcolm (Stirling)
Sorensen, R. W.


Hamilton, W. W.
Mainwaring, W. H.
Soskice, Rt. Hon. Sir Frank


Hannan, W.
Mallalieu, J. P. W. (Huddersfield, E.)
Sparks, J. A.


Hardy, E. A.
Mann, Mrs. Jean
Steele, T.


Hargreaves, A
Manuel, A. C.
Stewart, Michael (Fulham, E)


Hastings, S.
Marquand, Rt. Hon. H A
Stokes, Rt. Hon. R. R


Hayman, F. H.
Mathers, Rt. Hon. G
Strachey, Rt. Hon. J.


Henderson, Rt. Hon. A. (Rowley Regis)
Mayhew, C. P
Strauss, Rt. Hon. George (Vauxhall)


Hewitson, Capt. M.
Mellish, R. J.
Stross, Dr. Barnett


Hobson, C. R
Messer, F.
Summerskill, Rt. Hon. Edith


Holman, P.
Middleton, Mrs L
Sylvester, G. O.


Holmes, Horace (Hemsworth)
Mikardo, Ian.
Taylor, Bernard (Mansfield)


Houghton, D.
Mitchison, G R
Taylor, Robert (Morpeth)


Hoy, J.
Moeran, E. W
Thomas, David (Aberdare)


Hubbard, T
Monslow, W.
Thomas, George (Cardiff)


Hudson, James (Ealing, N.)
Moody, A. S.
Thomas, Iorwerth (Rhondda, W.)


Hughes, Emrys (S. Ayrshire)
Morley, R.
Thomas, Ivor Owen (Wrekin)


Hughes, Hector (Aberdeen, N.)
Morris, Percy (Swansea, W.)
Thorneycroft, Harry (Clayton)


Hynd, H. (Accrington)
Morrison, Rt Hon. H. (Lewisham, S.)
Thurtle, Ernest


Hynd, J. B. (Attercliffe)
Mort, D. L.
Timmons, J.


Irvine, A. J. (Edge Hill)
Moyle, A.
Tomney, F.


Irving, W. J. (Wood Green)
Mulley, F. W
Turner-Samuels, M.


Isaacs, Rt. Hon. G. A.
Nally, W.
Usborne, H.


Janner, B.
Neal, Harold (Bolsover)
Vernon, W. F.


Jay, D. P. T.
Oldfield, W. H.
Viant, S. P.


Jeger, George (Goole)
Oliver, G. H.
Wade, D. W.


Jenkins, R. H.
Orbach, M.
Wallace, H. W.


Johnson, James (Rugby)
Padley, W. E
Watkins, T. E.


Johnston, Douglas (Paisley)
Paget, R. T.
Webb, Rt. Hon. M (Bradford, C.)


Jones, David (Hartlepool)
Paling, Rt. Hon. W (Dearne Valley)
Wells, Percy (Faversham)


Jones, Frederick Elwyn (West Ham, S.)
Pannell, T. C
Wells, William walsall


Jones, Jack (Rotherham)
Parker, J
West, D. G.


Jones, William Elwyn (Conway)
Paton, J.
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Keenan, W.
Pearson, A.
White, Mrs. Eirene (E. Flint)


Kenyon, C.
Peart, T. F.
White, Henry (Derbyshire, N.E.)


Key, Rt. Hon. C. W
Popplewell, E
Whiteley, Rt. Hon. W.


King, Dr. H. M.
Porter, G.



Kinghorn, Son. Ldr. E
Price, Joseph T. (Westhoughton)
Wigg, G.


Kinley, J.
Price, Philips (Gloucestershire, W.)
Wilcock, Group Capt. C. A. B.


Lang, Gordon
Proctor, W. T
Willey, Frederick (Sunderland)


Lee, Frederick (Newton)
Pryde, D. J.
Willey, Octavius (Cleveland)


Lee, Miss Jennie (Cannock)
[...]rsey, Cmdr. H
Williams, David (Neath)


Lever, Leslie (Ardwick)
Rankin, J.
Williams, Rev. Llywelyn (Abertillery)


Lewis, Arthur (West Ham, N.)
Rees, Mrs. D.
Williams, Ronald (Wigan)


Lewis, John (Bolton, W.)
Reeves, J.
Williams, W. T. (Hammersmith, S.)


Lindgren, G. S.
Reid, Thomas (Swindon)
Wilson, Rt. Hon. Harold (Huyton)


Lipton, Lt.-Col. M
Roberts, Goronwy (Caernarvonshire)
Winterbottom, Ian (Nottingham, C.)


Logan, D. G.
Robertson, J. J. (Berwick)
Winterbottom, Richard (Brightside)


Longden, Fred (Small Heath)
Robinson, Kenneth (St. Pancras, N.)
Woodburn, Rt. Hon A


MacColl, J. E.
Rogers, George (Kensington, N.)
Wyatt, W. L.


McGhee, H. G
Shackleton, E. A. A.
Yates, V. F.


McGovern, J.
Shinwell, Rt. Hon. E.
Younger, Rt Hon K


McInnes, J.
Shurmer, P. L. E.



Mack, J. D.
Silverman, Julius (Erdington)
TELLERS FOR THE NOES:


McKay, John (Wallsend)
Silverman, Sydney (Nelson)
Mr. Wilkins and Mr. Royle.

New Clause.—(SETTLEMENT FOR BENEFIT OF CHILDREN.)

(1) Where, by virtue or in consequence of any settlement to which this section applies, any income is paid to or for the benefit of a child of the settlor in any year of assessment, the provisions of section twenty-one of the Finance Act, 1936, shall cease to have effect as respects any such income.

(2) This section applies to any settlement if and so long as the income arising under the settlement is shown to the satisfaction of the General or Special Commissioners to have been used wholly and exclusively for the payment of fees and the cost of text-books for the full-time instruction of the child of the settlor at a university, college, school, or other educational establishment:

Provided that this section shall not apply if the full-time instruction as aforesaid is at an

independent school, within the meaning of subsection (1) of section one hundred and fourteen of the Education Act, 1944, and that school has been struck off the register of independent schools kept under the provisions of section seventy of that Act.

(3) For all the purposes of the Income Tax Acts there shall be deducted from the income of a child arising under a settlement to which this section applies such sums as are wholly and exclusively laid out or expended for the purposes mentioned in subsection (2) of this section.

(4) If any question arises whether the income arising under the settlement has been used as aforesaid, the Commissioners of Inland Revenue may, on the request of the Income Tax Commissioners concerned, consult the Minister of Education.

In the application of this subsection to Scotland the Secretary of State shall be substituted for the Minister of Education.

(5) In this section the expressions "child" "income," settlement," and "settlor" shall have the same meaning as is given to them by subsection (9) of section twenty-one of the Finance Act, 1936.—[Mr. Pitman.]

Brought up, and read the First time.

Mr. I. J. Pitman: I beg to move, "That the Clause be read a Second time."
The right hon. Member for Ebbw Vale (Mr. Bevan), speaking on the previous new Clause, asked the Treasury to adopt economic planning through the fiscal machine in a positive way in regard to raw materials. This new Clause asks for the same positive treatment in planning in the development of material, human and spiritual values, because it deals with education.
First, I ought to disclose a threefold interest. In the first place, I am, at the request of the Minister of Education, a governor of a public school which might benefit under this Clause; secondly, being connected with the colleges associated with my grandfather, I might benefit; and thirdly, I still have three children of full-time attending age at school. Unfortunately, two of my brothers and a sister were in the unhappy position which the hon. Member for Carlton (Mr. Pickthorn) was describing the other day; their wills became effective rather sooner than they expected, and so there were settlements for nephews and nieces. So I think my interest does not arise in this case.
The purpose of this Clause is virtually to repeal the mischief of a Clause in the 1936 Finance Bill. Under the law which has existed since 1936, the Financial Secretary can properly provide for his dependent grandmother. He can maintain her and, if he likes, arrange for her instruction in sucking eggs or anything else she likes. Anyhow, he is not limited and he can provide for both her maintenance and her education.
But if he wishes to make a settlement in favour of his son to send him to Winchester, he is not in the same position as he is with regard to his grandmother. He will have to add back the income spent on the education and maintenance of his son and declare it and pay tax on it as part of his own income. It is true that one can do the same thing under the existing law if one does it for a nephew. If provision is made for the

education and maintenance of a nephew through a settlement of this kind, then neither the father of the nephew nor oneself need regard that income as their own income. It is treated as the income of the child.
4.45 p.m.
Therefore, it is only the parent who is penalised, and it seems to me that this House would always wish the sense of responsibility of parents for their children to be developed to the maximum extent. One of the unfortunate effects of the present law is that it tends to have parents seeking to detach from themselves and to attach to grandparents or uncles the financial responsibility for at any rate educating and possibly maintaining, their children, because it costs a grandparent or uncle or aunt so much less to do it for a nephew or grandchild than it costs a father to do it for his son or daughter. I am sure the House will feel that is essentially wrong.
The real trouble, however, is that in 1936 it was possible to do this in respect not only of education but also of food and clothes—the normal necessities of life. The purpose of this Clause is to put back only the education, not food and clothes. When the Chancellor of the Exchequer, the late Neville Chamberlain, introduced the 1936 Finance Bill, he made it quite clear that the educational side was thoroughly praiseworthy. These are his words:
I rather went out of my way to say that, although quite recently they were developing into a new form in which tax avoidance was the principal object, there were many, many cases that I knew in which they had been entered into, not from that motive at all, but from different motives which in themselves were perfectly proper and even praiseworthy."—[OFFICIAL REPORT, 20th May, 1936; Vol. 312, c. 1257–1258.]
May I say that, particularly because of the effect of subsection (2) of this new Clause which confines the purpose of the settlement entirely to education and does not cover in the slightest the loaf of bread or the piece of clothing, this Clause is wholly praiseworthy. It will mean, of course, that boarding schools will have to supply accounts to the parents separating fees and text books from maintenance, but I understand that presents no difficulty.
I have now established that the conditions for a change have been met. Now


comes the point that it is now the right time to make such a change. In any case, it is always right in principle to put right something which is wrong.
In regard to the discouragement of the education of children by their parents, the present situation of the fiscal arrangements of this nation, as I pointed out during the Committee stage of this Bill, is such that, quite apart from settlements, the father of three children is demonstrably much worse off than a father of two and he, in turn, is much worse off than the father of one. At all stages, taking family allowances and taking the Income Tax allowances, as facts are there is already a very grave discouragement on parenthood. All of us know that the costs of education are going up all the time. If, therefore, the educational discouragement is added to the discouragement of the existing costs of maintaining children, we have a double discouragement, piling Pelion upon Ossa.
I should like to read to the House an extract from the Report of the Royal Commission on Population—Cmd. 7695—in paragraphs 383–4:
At every stage of education, from the primary to the university, options which involve incurring extra costs have multiplied…To secure these advantages many parents have to make real sacrifices, to the point sometimes of cutting down expenditure on their food and other essentials of health. There is here a strong motive for restricting the number of children to be educated, since the fewer the children in the family the more can be spent on educating and preparing them for a career; and it is not surprising that among responsible and intelligent parents this is one of the most commonly stated reasons for keeping the family very small.
This advantage which the small families enjoy offends against currently accepted ideas of social justice. It has other social implications, too. The discouragement to parenthood which education costs involve is felt most heavily by those who are most concerned for the welfare of their children, i.e., by the more thoughtful, intelligent and responsible parents, and it grows with the sense of responsibility.
It must therefore be a good thing that we should use the fiscal machine to do what common sense clearly shows, in regard to discouragement, and what the Royal Commission on Population equally shows, to need ameliorating.
This will also inevitably help the independent schools which, I think we would claim, have been the great pioneers of

education and of the very greatest service to the State and to the community. The great advantage which they enjoy is the supreme flexibility which enables them to try out and to develop new lines of educational thought. As I have said, I was asked by the Minister of Education to be a governor at just such a school. Having sat at its meetings, I know of the difficulties which those schools at present face and how greatly they would be relieved by such an arrangement as is made possible by the Clause.
Finally, I come to my constituency interest. We have in Bath the Admiralty, with its civil servants and its serving officers, who are very mobile. For a high-ranking, mobile civil servant or naval officer, a boarding school is an essential necessity if he is to carry out his duties and see that his children are properly care for. The local authorities in Bath and elsewhere in Somerset—the same applies, in Plymouth and Devonport, under the Devon County Council—are inundated by applications for assistance and-r the Butler Act but they just cannot carry it out, because they have to carry on local rates what is in effect a national problem. If only these men were allowed to obtain reduction of the total of the income on which they pay tax by the amount which they spend on the education of their children, this would go a very long way to solving what is a very peculiar and local difficulty.

Mr. Hollis: I beg to second the Motion, which has been so ably moved by my hon. Friend the Member for Bath (Mr. Pitman). If to have children requires one to declare an interest, then I, too, must declare an interest in the Clause. I had not thought of rising to such a high pitch of conscientiousness until I heard my hon. Friend do so, but I certainly do not wish to fall behind him in that respect. He has so clearly made the case for the Clause that I do not think it necessary for me to detain the House long in supporting it, but I should like, in summing up, as it were, to put before the House the three headings under which, I think, the Clause should be supported.
These three headings are what I might call the fiscal, the demographic, and the argument from precedent. First, there is the fiscal argument on the intrinsic justice of the Clause. For some strange


reason the whole taxation of the nation almost always bears hardly upon those who have families. There is a curious and continuing bias in favour of maiden aunts—

Miss Horsbrugh: Oh!

Mr. Hollis: I beg my right hon. Friend's pardon. I hope she will have a chance of replying later.
To have a family is a very great hardship in general, and in this case there is a special hardship, as my hon. Friend has shown, on parents. If I were a rich and generous person and were to say to the Financial Secretary, "You will never come to much in life, therefore I will educate your children for you," there is no reason why I should not make a seven-year covenant, pay £110, and in fact get back the other £90, or whatever the exact figure is, from the Revenue. As my hon. Friend has shown, I can do that for anyone in the world except for my own children. This, surely, is a common sense matter of injustice which should be remedied.
Secondly, there is the demographic point. My hon. Friend referred to the Royal Commission on Population. As hon. Members know, the general conclusion of that Commission was that the total population of the country was not very far—not as far as some people thought—below the reproduction rate; but on the other hand there was a serious deficiency in the birth rate of children of the best educated people.
As also a considerable volume of biological evidence was put before the Commission to show that by and large ability was hereditary, there was at any rate the distinct possibility that, since the population in general was remaining roughly stable and the best educated and most intelligent people were having the fewest children, therefore the general level of intelligence of the population must be falling. I remember that I put that point when we debated a similar Clause last year and the Financial Secretary made what seemed to me a somewhat comic answer. He said: "We on this side of the House do not accept that argument for an instant."
It is not a question whether the Financial Secretary or hon. Members opposite admit it. It is a question of whether it

is a biological truth or whether it is not, and not whether it is or is not voted for. I am reminded a little of Harriet Martineau. People came with great excitement one day to Thomas Carlyle and said, "Harriet Martineau has accepted the universe." Carlyle said, "By gad, she'd better." It is the laws of the universe with which we are at the moment concerned rather than the laws which the House sees fit to pass, and the Financial Secretary had better accept them—by gad, he'd better. There is a serious reason to think that unless some drastic policy is pursued in order to induce the best educated people to have a large number of children, there will be a decline in the average level of the intelligence of the population.
5.0 p.m.
The third point is the argument from precedent. There are some hon. Members opposite, and I respect them—I see the hon. Member for Sowerby (Mr. Houghton) present, but I do not want to wake him—who are great worshippers at the shrine of what I might call Inland Revenue precedent and often, to an extent which seems to me more conservative than I can tolerate, imagine that they can refute every argument by pointing to what are the precedents of the Inland Revenue. Sometimes I think he will seek to follow precedent when circumstances have changed so wholly that it is no longer wise to follow it. However that may be, I respect the general tenor of his attitude and pay attention to it.
In this respect the precedent is on our side. We are not seeking to do something new, but to go back to the practice which was allowed until recently and to go back to it in one respect in which it was shown that it was not really necessary to abolish the practice, even if it were necessary to abolish it in other respects. From the fiscal, the demographic and the point of view of precedent I appeal to the Government to give every favourable consideration to this new Clause.
After all, something has to be done about this problem whether we like it or not. We could have a larger debate on the merits of independent schools. I quite agree with what my hon. Friend said about the merits of independent schools, but, whether one likes independent schools or does not like them, the fact remains


that this country is committed to an educational programme and there is not the slightest hope, even if it were desired, of having sufficient non-independent schools to accommodate all the children if the independent schools came to an end.
There is a financial situation which makes it extremely difficult to see how the independent schools can go on for long enough to enable other schools to take their place, if some financial arrangements are not made. I am not saying that this is the only way of dealing with independent schools. In fact, on another occasion, I put another suggestion before the House, which the House rejected. It may be that some hon. Members would have other suggestions to make, but the suggestion of my hon. Friend the Member for Bath has been carefully thought out and, as far as I can see, it is the best of the different suggestions which have yet been put forward.
I seriously appeal to the Government, either to accept this new Clause if they can, or, if they do not see their way to accepting it, at least not to give it a merely negative reply, but to indicate on what lines they think this problem can be solved.

The Financial Secretary to the Treasury (Mr. Douglas Jay): Although I have no more prejudice against the fathers of children than the hon. Members who have just spoken I do not think it will surprise the hon. Member for Bath (Mr. Pitman) if I tell him that we see overwhelming objections to this new Clause.
As the hon. Member said, the Clause would, in effect, repeal the provision of the 1936 Act which prevented the taxpayer from getting exemption from Income Tax and Surtax on sums settled for the purpose of educating and maintaining his own children. I think the hon. Member agreed that Mr. Neville Chamberlain said that, in many cases, the law on this matter, as it stood before 1936, was used for the purposes of tax avoidance, and, indeed, it offers a fairly easy and obvious loophole for avoiding tax. There are several very heavy objections to any sort of return to the status quo in this way.
In the first place, even if our objective was to assist Income Tax payers to finance the education of their children at independent schools, this would seem a

rather peculiar way of doing it. The Clause would give such a relief in the case of those taxpayers who had resorted to a particular legal device, but not to other taxpayers who might have an equal number of children at the same schools. Surely, if we did wish to give help of that kind, it would at least be better to do it by giving an allowance for any expenditure on education rather than for expenditure through this particular device.
Secondly, even that, I think, would be open to the serious taxation objection that allowances under the Income Tax have always been granted in virtue of the existence of a dependant, or child as such, and not in virtue of some particular form of expenditure in which the taxpayer chooses or does not choose to indulge in connection with a dependant or child.
Thus, when we examine this proposal we are forced to the conclusion that it is better to give such a relief, if we wish to give it, by a larger children's allowance under the Income Tax than by an allowance confined to expenditure on education. But I think we are still bound to ask whether, supposing one had £10 million to spare—and this new Clause would cost about £10 million—it is really desirable, if it is to be spent on education, to spend that £10 million on tax relief for those who are educating their children, at private fee-paying schools, or whether it should not be spent on some section or other of the general education system of the country.
It could be argued that such a sum would be better spent on raising school teachers' salaries, or in building more schools, or in giving a larger subsidy for school meals, the price of which we have recently had to raise largely as a measure of economy. My view is that we could not give first priority to tax relief to the Surtax and Income Tax paying class, and if we put the arguments together there is an overwhelming objection to this proposed new Clause.

Viscount Hinchingbrooke: I confess to some interest in this Clause, having six children who are at present dependent upon me. I think the arguments adduced by the Financial Secretary are quite fantastic. He rejected the Clause on three grounds; on the ground of tax avoidance, on the ground that it was a particular legal device and on the ground of cost.
What if it is a piece of tax avoidance? I cannot see why parents in these days of high taxation should not be entitled to take advantage of tax avoidance rules and legislation, provided Parliament has passed it, and that is what we are trying to get done by this new Clause. The fact that Mr. Neville Chamberlain turned this down in 1936 has no relevance to the situation at present. Taxation then was very much less than it is now, and the people for whom this Clause is designed to operate are now in a position of being right up against it in connection with all their sources of income.
University professors, professional classes with incomes ranging from £1,000 to £3,000 or £4,000 are finding their circumstances today such that they simply cannot afford to maintain any kind of standard for themselves or their families as they could in the olden days, and the cost of their children's education is prohibitive. Many families are finding it necessary to avoid sending their children to the school where they themselves received their education; or if they are able to send them to the same school, they are having to do it by the expenditure of their savings, a situation which has never been known before.
Tax avoidance is only a bad principle when it leads to one particular section of the community taking an undue advantage over the rest. But I cannot see that in passing this Clause we are opening up that possibility. It is true that it applies to a particular section of the community, but they are a very worthy section, and if we were to assess the measures passed in recent years for the education of the community as a whole we should have to conclude that those in the lower income groups have had proportionately more advantages placed at their disposal in the last few years than have the particular section to which this Clause refers. I do not think that this is a tax avoidance which ought to be prepared against.
In an analogous way the hon. Gentleman went on to talk about a particular legal device resorted to by some taxpayers. There again, I do not see why they should not take advantage of it. If this Clause is passed it would be widely known, and everybody in these sort of circumstances would be prepared to have resort to it. If they did not know about it by publication in the public Press of

the details, their lawyers and friends would very soon tell them what it was possible to do within the law. I regard it as just as equitable to pass this Clause, resulting in a general widespread understanding of what Parliament has done, as for the hon. Gentleman to introduce legislation to have the thing done by allowances, as he suggested. In both cases Parliament has passed a particular piece of legislation, and it is known by those who are concerned and those who wish to take advantage of it.
Finally, the hon. Gentleman talked about the cost as £10 million and suggested it might be better spent on schools, school meals or training teachers, or some other aspect of affairs. That is the stock argument which the Chancellor of the Exchequer and the Financial Secretary have used for the last two or three years on every Finance Bill. Whenever we come up against a new proposal or a new Clause, designed to remedy an injustice or to do something right and proper, they say that it would cost too much; that the money is much better laid out in some other aspect of our public expenditure. At that rate, the hon. Gentleman could adduce that re-armament, or the cost of any of the great Departments of State, is a standing argument for doing nothing whatever to give tax concessions.
I find it very disappointing that the hon. Gentleman, who has turned down practically every proposal for tax remission in this Finance Bill, should use the same argument over this particular Clause What a very disappointing Finance Bill this has been. In the old days the Minister of Local Government and Planning came to the House on Report and Committee stages of the Finance Bill with about £30 million to spend, and we all had a very good time He opened his shoulders to the bowling, and scored a great many centuries. The House was delighted at the way he used to give way—five, ten, or fifteen million pounds—which used to make the Committee and Report stages of the Finance Bill a most interesting and profitable enterprise. This particular Chancellor, and the Financial and Economic Secretaries sitting under him, are just blocking the bowling at every stage. They are scoring maiden after maiden, and the House and the country is thoroughly tired of the performance which they have put up.

5.15 p.m.

Mr. Pickthorn: No one is more averse from internecine strife than I am, but I really must begin by praying Heaven to preserve us from a revival of the cheap money and cheap dutch auction régime to which my hon. Friend the Member for Dorset, South (Viscount Hinchingbrooke) has just referred. I think that even what I now see before me, if I am doomed to spend my life gazing at this sad and calamatous spectacle, I should prefer it to having that retrospect again made lively and three dimentional. When a yellow dog's dead, as my old father used to say, it ought to lie still.
Really, I am terrified at the thought of what would happen to the Financial Secretary when he tells us that his alleged argument he finds overwhelming. If he is so easily overwhelmed, it is terrifying to think what would happen if someone hit him with a small feather. I can only suppose it would reduce him to a quivering pinkish jelly, because the arguments really would not overwhelm a dead fly. The first was that we could not do this for these parents because there might be some other parents for whom we would not be doing anything. That is a highly contemptible argument, especially when used with reference to other parents, the great mass of whom would be enabled to enter into the same arrangement. It might have been thought from his argument that by passing this Clause we thereby put it out of the power of the Universe ever again to do anything further for parents.
Then the argument is that this is a tax avoidance. Anything which reduces the burden of taxes increases the avoidance of taxes, and the use of that argument from the Treasury Bench has no effect, except to demonstrate the extent to which they have now got boiled into them what I do not wonder was boiled into the hon. Member for Sowerby (Mr. Houghton), because he was for years paid to have it boiled into him. It is tolerable, even commendable, in the honourable service in which he performed with such distinction. It was boiled into him then that all that matters is that the State should get more and more and more out of the individual. The use of the words, "tax avoidance" by the Financial Secretary as if they damned the proposal

demonstrates nothing whatever except that that assumption has been boiled into him, and it ought not to be boiled into anyone, except Inland Revenue officials—and only minor ones at that.

Mr. Glenvil Hall: May I interrupt the hon. Member?

Mr. Pickthorn: I shall be delighted; it will be a great help.

Mr. Glenvil Hall: I was wondering whether the hon. Gentleman was aware that this argument about tax avoidance was first used by Mr. Neville Chamberlain when this Clause was introduced in 1936.

Mr. Pickthorn: This argument about tax avoidance was very ancient when Joseph used it in Egypt. The suggestion that it was invented by Mr. Neville Chamberlain does that rather inventive and progressive statesman far more than justice.
The only other argument which was proposed was "if one had £10 million is it certain that this would be the best use of the money?" Supposing one had £10 million. The gentleman in Whitehall does take much upon himself. He does not always know best, and he is never likely to have £10 million. The Treasury Bench has directed no attention whatever to the question which has been raised by this clause, and which I will therefore proceed to put as nearly as possible in words of one syllable.
Do we think there ought to be more than one school system, or that we should have nothing except the State system? I see a strong argument for the view that every other school ought to be frozen up. But the Government, I think, had not nailed that flag to their mast. I hope they never will. That has done infinite harm in France and Germany, as anyone who knows those countries will admit. If not, how is the independent school to be preserved so that we shall not be reduced to what the French call l'école unique,one single kind of school? The way in which it must be done may be argued, the reason why, if you want two sorts of school, it must, is that parents who patronise those schools are, in the enormous majority, losing their disposable income, having a smaller proportion of their disposable income every year. I do not say it is not right, but everyone


knows that has been happening for 30 years, is happening, and is likely to continue to happen.
The question then is: ought there not to be some means by which that difficulty should be eased for the parents who wish to use these schools? This may not be the best possible method, but it seems to me to be clearly a rather good method. I am quite certain of this, that when hon. and right hon. Gentlemen who are responsible for directing the line of development of this country—and that is what the Finance Bill has overwhelmingly and, to use another word again, calamitously become—when a question of this sort is raised with perfect fairness, as it is raised in this proposed new Clause, can produce nothing except the drivelling dialectics of the Financial Secretary, they cover themselves with shame and scorn, and I hope prepare for themselves defeat and damnation.

Mr. Joynson-Hicks: I join with my hon. Friends in pressing the Government upon this point. I listened with attention, as I think the whole House did, to the Financial Secretary, and I was exceedingly disappointed in his arguments, which appeared to me to be positively sophomoric. I think they have been dealt with adequately already and I do not propose to go into them further, because they carry no weight whatsoever. The really distressing thing about his arguments was that the hon. Gentleman did not appear to appreciate at all the seriousness of the situation from the purely educational point of view in this country.
With regard to that, in passing I think that the House may well take note of the fact that there is no representative from the Ministry of Education on the Government Front Bench. It certainly would have been of assistance to the House to have had the views of some Minister in this Government responsible for education on the attitude of the Government on the major issues of education which are involved in this proposed new Clause, because the point we should consider is not only the purely personal financial element of the parent who is seeking to have independent education for his children, but also the point of view of the schools to which those children go.
I, in concert with my hon. Friends, declare a triple interest in this. The first interest I declare is that of a taxpayer, which nobody else has declared, because I believe that it is to the taxpayer's interest that this new Clause should be passed, and I shall show the hon. Gentleman presently why that is so. Secondly, I am also interested as a parent. Thirdly, I am interested as a governor of schools. We know full well in those private schools the immense difficulties which parents are having at the present time to be able to afford to send, and to continue to send, their children to those schools.
In fact, I have started to try to work out what it would cost a parent with three children—and even in these days that does not seem to me to be an excessive number—for whom he is entirely responsible, for the payment of their maintenance and education out of his earned income. I reckon that in order to keep and maintain three children simultaneously at school at the present time he would, have to earn a sum of approximately £6,000 to £6,500 a year. That shows that it is clearly quite impossible, and that at the present time education in private or independent schools is being financed out of savings—a situation which cannot continue.
It will mean that one by one, and then ten by ten, score by score and hundred by hundred these private schools will drop out, and then the whole responsibility for the education which has hitherto been carried on by the private and independent schools will be thrown back on the Government. That is why I say that the Financial Secretary does not appear to have begun to visualise the seriousness of this problem—the problem which we are seeking to attempt to deal with in a very limited measure by this new Clause.
Again, if that is to be the case, as my hon. Friend the Member for Devizes (Mr. Hollis) has pointed out, that is quite impossible of fulfilment at the present time; if there were no independent schools, the Government could not begin to tackle the problem of how to enforce the educational laws in regard to children who are at present going to independent schools.
Secondly, when the Financial Secretary says he estimates that this would cost the Treasury £10 million, I wonder what he estimates it would cost the Treasury if


these children did all have to be educated at the expense of the taxpayer. It would certainly cost them an exceedingly substantial sum of money. The hon. Gentleman has indicated no basis whatsoever for his estimate of £10 million, and I cannot conceive how he arrives at that figure. I shall not be so bold as to attempt to estimate what would be the additional cost to the taxpayer if the independent schools do have to close down and, in consequence thereof, the education of these remaining children has to take place at the expense of the taxpayer.
Another aspect of the matter which the Financial Secretary seemed to me to avoid entirely was in the actual element of tax avoidance, where he skirted the issue—I think we can say he evaded the issue rather than avoided it. The very weight of taxation and the problem upon the taxpayer is, of itself, forcing him into the avoidance of tax liability: a perfectly proper and legitimate thing for him to do, in so arranging his affairs that they do not attract incidence to tax.
But it is that very fact, the weight of taxation and the expense in which he is involved, which is forcing him into the tax avoidance position, and what we are suggesting by this new Clause is that, by a very meagre simplification of the law he shall be given a legitimate way out of that—a way recognised and approved by Parliament—whereby he can gain the benefit, in effect, of educating his children out of gross income instead of having to do it out of net income.
I shall not detain the House with any further arguments upon this, because I believe that we have got and made, self-evidently, an overwhelming case. The final basis of the whole argument is the argument of logic. It really is ridiculous that a man can befriend and educate his nephew, or a cousin, or a stranger, or whomsoever he likes except his own child out of his gross income. He has not got the right and privilege of fulfilling his duty of educating his own child with the same advantages that he has the right and privilege, but not the duty, of educating somebody else's child.
It really is a most ridiculous position into which the Government have forced the parent at the present time. By this new Clause we are specifically limiting the

concession—if so be it can be called a concession—which is being given to the taxpayer to the question of education alone, and not to the question of maintenance, which was the basis of the allegation of avoidance raised by Mr. Neville Chamberlain. For those reasons, I again urge and press the Government to deal with this matter fairly and sensibly and to accept, if not this actual Clause at least the spirit which it contains.

5.30 p.m.

Miss Horsbrugh: I think we were all surprised by what we heard from the Financial Secretary when he replied to my hon. Friends. He began by telling us that the arguments were overwhelming. I am glad that he told us they were overwhelming, because when we heard them none of us thought they were. He went on to say that the objections were very heavy. We have been listening to hear the plan laid out in detail, but we have not got any details. It seems to me that the Minister wished to avoid argument, and would not get right up to the case and state his view.
We are all agreed about the subject of tax avoidance, and this Clause was drafted so that particular safeguards would be brought in. My hon. Friends have referred to them. Not only is there the safeguard of education and the maintenance of the machinery, but there are two other safeguards—first, the power given to the Commissioners, and secondly, the consultations with the Minister of Education and the Secretary of State for Scotland. If the hon. Gentleman can say where he believes these safeguards will not work, and if he can tell us that with those safeguards tax can still be avoided, I shall be very much surprised. Anyhow, he did not tell us. He gave us no idea, and he must realise that by these safeguards he would prevent tax avoidance in this particular scheme.
My hon. Friend the Member for Chichester (Mr. Joynson-Hicks) referred to the anomaly—and we all agree it is an anomaly—that any man by a covenant can pay for the education of any except his own children. That we all think is wrong. It is wrong because we in this House in these difficult days are looking more and more to the improvement of our educational system. I do not believe that any Member would support the idea contained in that anomaly. The hon. Gentle-


man did not deal with that subject. I think he skated round it very well, though he should have dealt with the question whether those who have to pay for the education of their children should receive some tax relief or not.
We are not dealing here with people having enormous incomes. We are dealing with a very large number of people in this country whose incomes are not large but who are determined to pay for the education of their children and who believe in our system of education, which, as my hon. Friend the Member for Carlton (Mr. Pickthorn) said, is a dual system, made up of the independent school and the school which is maintained from the rates and taxes. I should like to ask the Financial Secretary whether he defends that system or whether he wants to get rid of it. That is the point.
Do we wish to see the people who can make these payments helped in making them or do we not? That is what we have to face.

Mr. Eric Fletcher: Is the right hon. Lady not aware that many of these independent schools at the moment have longer waiting lists than ever they had before?

Miss Horsbrugh: Some have and some have not. I quite agree that many have waiting lists, but there are people who wish to send their children to the school at which they themselves have been or to a school which has been recommended to them, and they put down the children's names very early.
When the hon. Gentleman is considering the long waiting lists, he should also ask himself what is the number of cancellations. People are looking ahead in these days, as we all agree they should do, and with the value of money completely different, the question arises whether these people will be able to meet the school fees. I suggest to the Financial Secretary that what we are doing is trusting to these people to continue to pay the fees, because it will be very hard on the Treasury if they do not. It will not be £10 million, but a much greater sum which will fall on the national Exchequer.
The Financial Secretary based his argument on the belief that these people will continue to pay these fees, even if we do not help them. Is that right? Hon. Members

should think very clearly about the matter. The anomaly to which reference has been made should be got rid of. I do not think that anyone wants to see it continued. The safeguards are in the new Clause, and no one has suggested that, with these extra safeguards of the Commissioners and of consultations with the Minister of Education and the Secretary of State for Scotland, tax avoidance could be carried through. We have kept our new Clause to the subject of education and not dealt with maintenance.
Before the House this afternoon there is a simple question. We know the difficulty of people continuing to pay for the education of their children. If they cannot go on, the independent schools in the end must cease. We know that there are people of small means who are anxious to make this payment, and I ask the representatives of the Government this question—do the Government prefer to see the people themselves paying for the education of their children, or do they wish to see these payments come to an end and one system of education be established?
We have not heard any details of how the £10 million is arrived at. All we have been told is that this concession will cost £10 million, and that such a sum can be better used for other things. The money that is spent by these people on the education of their children, is, I would suggest, of benefit to the country as a whole, and a much larger bill will be presented to the Government if these people are not able to continue these payments.
Something which appeals to hon. Members in all parts of the House is the fact that our educational system is so diversified, and if that is to continue something will have to be done to help these people. I hope that before the House divides we shall hear something about how it is proposed that this independent education should continue and how help is to be given to these people to help themselves and save the taxpayers' money.

Mr. Gerald Williams: I do not want to repeat the arguments already made but I want to impress one point upon the hon. Member for Islington, East (Mr. E. Fletcher), who referred to the fact that there are large waiting lists


at our public schools, The point to remember is that the fees at public schools have so far gone up only 25 to 30 per cent., while the price of everything else has gone up 100 per cent. Further, if a Socialist Government stays in office, the people who have put their children's names on these lists will be faced with bills which may well be half as much again as they are now. If these people are to be driven from the public schools because of the greatly increased fees, then the State will be faced with the prospect of paying those fees, and already there is a shortage of schools, teachers and text books.
Another thing which has not yet been mentioned is that we shall lose a very great incentive to work harder, because a man takes more pride in sending his children to the school of his own choice, or where he himself has been, than in anything else. That is an incentive which would make him work harder and produce a little more in the national interest. I hope the Financial Secretary will think again before we divide on this subject.

Mr. Nabarro: I am in full agreement with my right hon. Friend the Member for Moss Side (Miss Horsbrugh) that we should have a little more information as to where the figure of £10 million is derived from. It is assumed that the cost to the parents of educating a child at a preparatory school or a public school is on an average, £250 per annum. After making due allowance for Income Tax at the rate of 9s. 6d. in the £, it is to be inferred from the figure of £10 million that something of the order of 80,000 such children are involved.

Mr. Glenvil Hall: What about Surtax?

Mr. Nabarro: The right hon. Gentleman refers to Surtax, but that only reinforces my argument.
The first point I want to make is that if the Treasury Bench insist that the cost of conceding this Clause is £10 million per annum it is quite clear to me that in any computation of this sort the complementary cost of educating the children, who are at present at public, private or preparatory schools, were they sent to State schools, must be deducted from the £10 million. I am not sure what is the average

cost per annum of educating a child at a State school. I am told that if it is a primary school the cost is probably of the order of £15 per annum and that if it is a Borstal institution it is probably of the order of £120 per annum. If there are 80,000 children involved in this proposal, and if the average cost is £50 per child at the State school, it follows that £4 millions would be spent if all the children now educated at private schools were sent to State schools. Thus, the figure of £10 million automatically falls to £6 million.
There is a second financial aspect of the matter. The Chancellor gives Income Tax allowances at the rate of 3s. 6d. in the £ up to one-sixth of the total income to a parent who provides educational insurance policies. If all the children were transferred to State schools, presumably that would have a direct bearing on the amount of such Income Tax allowances, so that the £6 million would be substantially reduced. From a combination of those two factors I suggest that the cost to the Treasury of conceding what has been asked for in this Clause would be reduced to a negligible sum.
There is a moral consideration. I join with the noble Lord, who mentioned that he has six children and that the cost of educating them might prove prohibitive. I have three children, all very young, and I view with very grave concern the possibility of not being able to afford to educate them privately if the levels of Income Tax and Surtax remain as they are today. There are hundreds of thousands of people in this country who dislike State schools and want to educate their children privately. I see no reason why they should not be given the right of selectivity and be allowed, if they wish, so to do.
If a man owns a stud and trains racehorses, the whole cost of training and educating those racehorses for the track is admitted, for the purposes of calculating Income Tax, as a charge. What is applied to racehorses should surely be applied to young children, even if the young children are thoroughbreds. [HON. MEMBERS: "Oh!"] Why should the Treasury set up moral standards and apply one rule to—

Mr. Shurmer: Does the hon. Member mean to imply that only one section of the community consists of thoroughbreds?

Mr. Nabarro: The hon. Member completely misunderstands me. I am saying that it is evidently the intention of the Treasury to apply one set of Income Tax standards to bloodstock and thoroughbred racehorses and another set to human beings. I hope that the Chancellor will agree that children are more important than racehorses, and that he should give the concession that is asked for in the proposed new Clause.

5.45 p.m.

Mr. H. Strauss: If the proposed new Clause is rejected and all alternatives are rejected likewise—and that is the policy of the Government—this is what the

Government are deliberately saying to the professional classes of this country: "It will be impossible for you to have your children educated as well as you have been educated yourselves." That is an act of great cruelty. There are few things more cruel than to say to a man: "We will make it impossible for you to give to your children the education that you have been fortunate enough to enjoy yourself."

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 261; Noes, 286.

Division Mo. 159.]
AYES
[5.47 p.m.


Aitken, W. T.
Dodds-Parker, A. D.
Hylton-Foster, H. B.


Amery, Julian (Preston, N.)
Donner, P. W.
Jennings, R.


Amory, Heathcoat (Tiverton)
Douglas-Hamilton, Lord Malcolm
Johnson, Howard (Kemptown)


Arbuthnot, John
Drayson, G. B.
Jones, A. (Hall Green)


Ashton, H. (Chelmsford)
Drewe, C.
Joynson-Hicks, Hon. L. W.


Assheton, Rt. Hon. R. (Blackburn, W)
Dugdale, Maj. Sir Thomas (Richmond)
Kaberry. D.


Astor, Hon. M. L
Duncan, Capt. J. A. L
Kerr, H. W. (Cambridge)


Baker, P. A. D.
Dunglass, Lord
Lambert, Hon. G


Baldock, Lt.-Cmdr. J. M
Duthie, W. S
Lancaster, Col. C. G


Banks, Col. C
Eccles, D. M.
Langford-Holt, J.


Baxter, A. B.
Eden, Rt. Hon. A.
Law, Rt. Hon. R. K.


Beamish, Maj. Tufton
Elliot. Rt. Hon. W. E
Leather, E. H. C.


Bell, R. M.
Erroll, F J.
Legge-Bourke, Maj. E. A. H.


Bennett, Dr. Reginald (Gosport)
Fisher, Nigel
Lindsay, Martin


Bennett, William (Woodside)
Fort, R
Linstead, H. N


Bevins, J. R. (Liverpool, Toxteth)
Foster, John
Liewellyn, D.


Birch, Nigel
Fraser, Hon. Hugh (Stone)
Lloyd, Rt. Hn. G. (King's Norton)


Bishop, F. P.
Fraser, Sir I. (Morecambe &amp; Lonsdale)
Lloyd, Maj. Guy (Renfrew, E.)


Black, C. W.
Fyfe, Rt. Hon. Sir David Maxwell
Lloyd, Selwyn (Wirral)


Boles, Lt.-Col. D. C. (Wells)
Gage, C. H.
Lockwood, Lt.-Col. J. C.


Bossom, A. C.
Garbraith, Cmdr. T. D. (Pollok)
Longden, Gilbert (Herts, S.W.)


Boyd-Carpenter, J. A
Galbraith, T. G. D. (Hillhead)
Low, A. R. W.


Boyle, Sir Edward
Gammans, L. D.
Lucas, Sir Jocelyn (Portsmouth, S.)


Bracken, Rt. Hon. B.
Garner-Evans, E. H. (Denbigh)
Lucas, P. B. (Brentford)


Braine, B. R.
Gates, Maj. E. E.
Lucas-Tooth, Sir Hugh


Braithwaite, Sir Albert (Harrow, W.)
Glyn, Sir Ralph
McAdden, S. J.


Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)
Gomme-Duncan, Col. A.
McCorquodale, Rt. Hon. M. S.


Bromley-Davenport, Lt.-Col. W
Gridley, Sir Arnold
Macdonald, Sir Peter (I. of Wight)


Brooke, Henry (Hampstead)
Grimston, Hon. John (St. Albans)
Mackeson, Brig. H. R.


Browne, Jack (Govan)
Grimston, Robert (Westbury)
McKie, J. H. (Galloway)


Buchan-Hepburn, P. G. T
Hare, Hon. J. H. (Woodbridge)
Maclay, Hon. John


Bollock, Capl. M
Harris, Frederic (Croydon, N.)
Maclean, Fitzroy


Bullus, Wing Commander E. E
Harris, Reader (Heston)
MacLeod, lain (Enfield, W.)


Burden, F. A.
Harvey, Air Codre. A. V (Macclesfield)
MacLeod, John (Ross and Cromarty)


Butcher, H. W.
Harvey, Ian (Harrow, E.)
Macmillan, Rt. Hon. Harold (Bromley)


Butler, Rt. Hn. R. A. (Saffron Walden)
Harvie-Watt, Sir George
Macpherson, Major Niall (Dumfries)


Carr, Robert (Mitcham)
Hay, John
Maitland, Cmdr. J. W.


Carson, Hon. E.
Head, Brig. A. H
Manningham-Buller, R. E.


Channon, H.
Heald, Lionel
Marlowe, A A. H


Churchill, Rt. Hon. W. S.
Hicks-Beach, Maj. W W
Marples, A. E.


Clarke, Col. Ralph (East Grinstead)
Higgs, J. M. C.
Marshall, Douglas (Bodmin)


Clarke, Brig. Terence (Portsmouth, W.)
Hill, Dr. Charles (Luton)
Marshall, Sidney (Sutton)


Colegate, A.
Hill, Mrs. E. (Wythenshawe)
Maude, Angus (Ealing, S.)


Cooper, Sqn. Ldr. Albert (Ilford, S)
Hinchingbrooke, Viscount
Maude, John (Exeter)


Cooper-Key, E. M.
Hirst, Geoffrey
Maudling, R.


Corbett, Lt.-Col. Uvedale (Ludlow)
Holmes, Sir Stanley (Harwich)
Medlicott, Brig. F.


Craddock, Beresford (Spelthorne)
Hope, Lord John
Mellor, Sir John


Cranborne, Viscount
Hopkinson, Henry
Molson, A. H. E.


Crookshank, Capt. Rt. Hon. H. F. C
Hornsby-Smith, Miss P.
Monckton, Sir Walter


Crouch, R. F.
Horsbrugh, Rt. Hon. Florence
Morrison, John (Salisbury)


Crowder, Capt. John (Finchley)
Howard, Gerald (Cambridgeshire)
Morrison, Rt. Hon. W. S (Cirencester)


Crowder, Petre (Ruislip—Northwood)
Howard, Greville (St. Ives)
Mott-Radclyffe, C. E


Cundiff, F. W.
Hudson, Sir Austin (Lewisham, N.)
Nabarro, G.


Cuthbert, W. N
Hudson, Rt. Hon. Robert (Southport)
Nicholls, Harmar


Darling, Sir William (Edinburgh, S.)
Hudson, W. R. A. (Hull, N.)
Nicholson, G.


Davidson, Viscountess
Hurd, A. R.
Noble, Cmdr. A. H. P


Davies, Nigel (Epping)
Hutchinson, Geoffrey (Ilford, N.)
Nugent. G. R. H.


de Chair, Somerset
Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Nutting, Anthony


De la Bère, R.
Hutchison, Col. James (Glasgow)
Oakshott, H. D.


Deedes, W. F.
Hyde, Lt.-Col. H. M.
Odey, G. W.




Ormsby-Gore, Hon. W. D.
Sandys, Rt. Hon. D.
Thorneycroft, Peter (Monmouth)


Orr, Capt. L. P. S.
Savory, Prof. D. L.
Thorp, Brig. R. A. F.


Orr-Ewing, Charles Ian (Hendon, N,)
Scott, Donald
Tilney, John


Orr-Ewing, Ian L. (Weston-super-Mare)
Shepherd, William
Touche, G. C.


Osborne, C.
Smithers, Peter (Winchester)
Turner, H. F. L.


Perkins, W R D
Smithers, Sir Waldron (Orpington)
Turton, R. H.


Peto, Brig. C. H. M
Smyth, Brig. J. G. (Norwood)
Vane, W. M. F.


Pickthorn, K.
Snadden, W. McN.
Vosper, D. F.


Pitman, I. J.
Soames, Capt. C.
Wade, D. W.


Powell, J. Enoch
Spearman, A. C. M.
Wakefield, Edward (Derbyshire, W.)


Price, Henry (Lewisham, W)
Spence, H. R. (Aberdeenshire, W.)
Wakefield, Sir Wavell (Marylebone)


Prior-Palmer, Brig. O
Spens, Sir Patrick (Kensington, S.)
Walker-Smith, D. C.


Profumo, J. D
Stanley, Capt. Hon. Richard (N. Fylde)
Ward, Hon. George (Worcester)


Raikes, H. V.
Stevens, G. P.
Ward, Miss I. (Tynemouth)


Rayner, Brig. R
Stewart, Henderson (Fife, E.)
Waterhouse, Capt. Rt. Hon. C


Redmayne, M.
Stoddart-Scott, Col. M.
Watkinson, H.


Remnant, Hon. P
Storey, S.
Wheatley, Maj. M. J. (Poole)


Renton, D. L. M.
Strauss, Henry (Norwich, S.)
White, Baker (Canterbury)


Roberts, Maj. Peter (Healey)
Stuart, Rt. Hon. James (Moray)
Williams, Charles (Torquay)


Robertson, Sir David (Caithness)
Studholme, H. G.
Williams, Gerald (Tonbridge)


Robinson, Roland (Blackpool, S.)
Summers, G. S.
Williams, Sir Herbert (Croydon, E.)


Robson-Brown, W.
Sutcliffe, H.
Wills, G.


Rodgers, John (Sevenoaks)
Taylor, Charles (Eastbourne)
Wilson, Geoffrey (Truro)


Roper, Sir Hareld
Taylor, William (Bradford, N.)
Winterton, Rt. Hon. Earl


Ropner, Col. L.
Teeling, W.
Wood, Hon. R.


Russell, R. S.
Thomas, J. P. L. (Hereford)



Ryder, Capt. R. E. D.
Thompson, Kenneth Pugh (Walton)
TELLERS FOR THE AYES:


Salter, Rt. Han. Sir Arthur
Thompson, Lt.-Cmdr. R. (Croydon, W.)
Major Conant and Mr. Digby.




NOES


Acland, Sir Richard
Cullen, Mrs. A
Hamilton, W. W.


Adams, Richard
Dalnes, P.
Hannan, W.


Albu, A. H.
Dalton, Rt. Hon. H.
Hardy, E. A.


Allen, Arthur (Bosworth)
Darling, George (Hillsborough)
Hargreaves, A.


Allen, Scholefield (Crewe)
Davies, A Edward (Stoke, N.)
Hastings, S.


Anderson, Alexander (Motherwell)
Davies, Rt. Hon. C. (Montgomery)
Hayman, F. H.


Anderson, Frank (Whitehaven)
Davies. Ernest (Enfield, E.)
Henderson, Rt. Hon. A. (Rowley Regis)


Attlee, Rt. Hon. C. R.
Davies, Harold (Leek)
Hewitson, Capt. M.


Awbery, S. S.
de Freitas, Geoffrey
Hobson, C. R.


Ayles, W. H
Deer, G.
Holman, P


Bacon, Miss Alice
Delargy, H. J.
Holmes, Horace (Hemsworth)


Baird, J.
Diamond, J.
Houghton, D


Balfour, A
Dodds, N. N.
Hoy, J.


Barnes, Rt. Hon. A. J
Donnelly, D.
Hubbard, T.


Bartley, P.
Dugdale, Rt. Hon. John (W Bromwich)
Hudson, James (Ealing, N.)


Bellenger, Rt. Hon. F. J
Dye, S.
Hughes, Emrys (S. Ayrshire)


Benn, Wedgwood
Ede, Rt. Hon. J. C
Hughes, Hector (Aberdeen, N.)


Benson, G.
Edelman, M.
Hynd, H. (Accrington)


Beswick, F.
Edwards, John (Brighouse)
Hynd, J. B. (Attercliffe)


Bevan, Rt. Hon. A. (Ebbw Vale)
Edwards, Rt. Hon. Ness (Caerphilly)
Irvine, A. J. (Edge Hill)


Bing, G. H. C.
Edwards, W. J. (Stepney)
Irving, W. J. (Wood Green)


Blenkinsop, A.
Evans, Abert (Islington, S.W.)
Isaacs, Rt. Hon. G. A.


Blyton, W. R
Evans, Edward (Lowestoft)
Janner, B.


Boardman, H
Evans, Stanley (Wednesbury)
Jay, D. P. T.


Booth, A.
Ewart, R.
Jeger, George (Goole)


Bottomley, A. G
Fernyhough, E.
Jeger, Dr. Santo (St. Pancras, S.)


Bowden, H. W.
Field, Capt. W. J.
Jenkins, R. H.


Bowles, F. G. (Nuneaton)
Fletcher, Eric (Islington, E.)
Johnson, James (Rugby)


Braddock, Mrs. Elizabeth
Follick, M
Johnston, Douglas (Paisley)


Brockway, A. F.
Foot, M. M
Jones, David (Hartlepool)


Brook, Dryden (Halifax)
Forman, J. C.
Jones, Frederick Elwyn (West Ham, S.)


Brooks, T. J. (Normanton)
Fraser, Thomas (Hamilton)
Jones, Jack (Rotherham)


Broughton, Dr. A. D. D
Freeman, John (Watford)
Jones, William Elwyn (Conway)


Brown, Thomas (Ince)
Freeman, Peter (Newport)
Keenan, W.


Burke, W. A.
Gaitskell, Rt. Hon. H. T. N
Kenyan, C.


Burton, Miss E.
Ganley, Mrs. C. S.
Key, Rt. Hon. C. W


Butler, Herbert (Hackney, S.)
George, Lady Megan Lloyd
King, Dr. H. M.


Callaghan, L. J.
Gibson, C. W.
Kinghorn, Sqn. Ldr E


Carmichael, J.
Gilzean, A.
Kinley, J.


Castle, Mrs. B. A.
Glanville, James (Consett)
Lang, Gordon


Champion, A. J.
Gooch, E. G.
Lee, Frederick (Newton)


Chetwynd, G. R
Gordon-Walker, Rt. Hon P C
Lee, Miss Jennie (Cannock)


Clunie, J.
Greenwood, Anthony (Rossendale)
Lever, Harold (Cheetham)


Cocks, F. S.
Greenwood, Rt. Hon. Arthur (Wakefield)
Lever, Leslie (Ardwick)


Coldrick, W.
Grenfell, Rt. Hon. D. R.
Lewis, Arthur (West Ham, N)


Collick, P.
Grey, C. F
Lewis, John (Bolton, W.)


Cook, T. F.
Griffiths, David (Rother Valley)
Lindgren, G. S


Cooper, Geoffrey (Middlesbrough, W.)
Griffiths, Rt. Hon. James (Llanelly)
Lipton, Lt.-Col. M


Cooper, John (Deptford)
Griffiths, W. (Manchester Exchange)
Logan, D. G.


Corbet, Mrs. Freda (Peckham)
Gunter, R. J.
Longden, Fred (Small Heath)


Cove, W G.
Haire, John E. (Wycombe)
McAllister. G.


Craddock, George (Bradford, S.)
Hale, Joseph (Rochdale)
MacColl, J. E.


Crawley, A.
Hale, Leslie (Oldham, W.)
McGhee, H. G.


Crosland, C. A. R.
Hall, Rt. Hon. Glenvil (Colne Valley)
McGovern, J.


Grossman, R. H. S.
Hall. John (Gateshead, W.)
McInnes, J.







Mack, J. D.
Peart, T. F.
Thomas, George (Cardiff)


McKay, John (Wallsend)
Popplewell, E
Thomas, lorwerth (Rhondda, W.)


Mackay, R. W. G. (Reading, N.)
Porter, G.
Thomas, Ivor Owen (Wrekin)


McLeavy, F.
Price, Joseph T. (Westhoughton)
Thorneycroft, Harry (Clayton)


MacMillan, Malcolm (Western Isles)
Price, Philips (Gloucestershire, W.)
Thurtle, Ernest


McNeil, Rt. Hon. H.
Proctor, W. T.
Timmons, J.


MacPherson, Malcolm (Stirling)
Pryde, D. J.
Tomney, F.


Mainwaring, W. H.
Pursey, Cmdr. H
Turner-Samuels, M.


Mallalieu, E. L. (Brigg)
Rankin, J.
Ungoed-Thomas, Sir Lym


Mallalieu, J. P. W. (Huddersfield, E.)
Rees, Mrs. D.
Usborne, H.


Mann, Mrs. Jean
Reeves, J.
Vernon, W. F.


Marquand, Rt. Hon. H. A
Reid, Thomas (Swindon)
Viant, S. P.


Mathers, Rt. Hon. G.
Reid, William (Camlachie)
Wallace, H. W.


Mayhem, C. P
Roberts, Rt. Hon. A.
Watkins, T. E.


Mellish, R. J.
Roberts, Goronwy (Caernarvonshire)
Webb, Rt. Hon. M. (Bradford, C.)


Messer, F.
Robertson, J. J. (Berwick)
Weitzman, D.


Middleton, Mrs. L
Robinson, Kenneth (St. Pancras, N.)
Wells, Percy (Faversham)


Mikardo, Ian.
Rogers, George (Kensington, N.)
Wells, William (Walsall)


Mitchison, G. R.
Shackleton, E. A. A.
West, D. G


Moeran, E. W.
Shinwell, Rt. Hon. E.
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Monslow, W.
Shurmer, P. L. E.
White, Mrs. Eirene (E. Flint)


Moody, A. S.
Silverman, Julius (Erdington)
White, Henry (Derbyshire, N.E.)


Morgan, Dr. H. B
Silverman, Sydney (Nelson)
Whiteley, Rt. Hon. W.


Morley, R.
Simmons, C. J.
Wigg, G.


Morris, Percy (Swansea, W.)
Slater, J.
Willey, Frederick (Sunderland)


Morrison, Rt. Hon. H. (Lewisham, S.)
Smith, Ellis (Stoke, S.)
Willey, Octavius (Cleveland)


Mort, D. L.
Smith, Norman (Nottingham, S.)
Williams, David (Neath)


Moyle, A.
Snow, J. W.
Williams, Rev. Llywelyn (Abertillery)


Mulley, F. W.
Sorensen, R. W
Williams, Ronald (Wigan)


Nally, W.
Soskice, Rt. Hon. Sir Frank
Williams, W. T. (Hammersmith, S.)


Neal, Harold (Bolsover)
Sparks, J. A.
Wilson, Rt. Hon. Harold (Huyton)


Oldfield, W. H.
Steele, T.



Oliver, G. H.
Stewart, Michael (Fulham, E)
Winterbottom, Ian (Nottingham, C.)


Orbach, M.
Stokes, Rt. Hon. R. R.
Winterbottom, Richard (Brightside)


Padley, W. E.
Strachey, Rt. Hon. J.
Woodburn, Rt. Hon. A


Paget, R. T.
Strauss, Rt. Hon. George (Vauxhall)
Wyatt, W. L.


Paling, Rt. Hon. W (Dearne Valley)
Stross, Or. Barnett
Yates, V. F.


Pannell, T. C
Summerskill, Rt. Hon. Edith
Younger, Rt. Hon K


Pargiter, G. A
Sylvester, G. O.



Parker, J.
Taylor, Bernard (Mansfield)
TELLERS FOR THE NOES:


Paton, J
Taylor, Robert (Morpeth)
Mr. Wilkins and Mr. Royle.


Pearson, A.
Thomas, David (Aberdare)

Clause 2.—(ENTERTAINMENTS DUTY.)

The Chancellor of the Exchequer (Mr. Gaitskell): I beg to move, in page 2, line 29, to leave out "First Schedule," and to insert:
Schedule (Entertainments: Revised Full Rates of Duty).
I think it might be for the convenience of the House if we could discuss with this Amendment the Schedule itself, which, of course, appears later in the Amendment paper.

Mr. R. S. Hudson: Mr. R. S. Hudson (Southport)
 indicated assent.

Mr. Gaitskell: I understand that the Opposition agree to what I propose. The House will recall that in the Budget proposals—

Mr. Deputy-Speaker: I gather that the right hon. Gentleman is suggesting discussing the Schedule with this Amendment. I am, of course, in the hands of the House, but I should have thought it might have been more convenient to discuss it when all the figures were before the House.

Mr. R. S. Hudson: If possible, it would be more convenient to deal in one single discussion with the Schedule and the Amendment.

Mr. Deputy-Speaker: I agree, and of course, there will not have to be another discussion on the Schedule.

Mr. Gaitskell: I think it would be convenient if we could proceed now. I am much obliged to you, Mr. Deputy-Speaker.
The House will recall that in the Budget proposals we intended to raise some £10 million in a full year by reason of the increased duty on entertainments, but that, in the case of the cinema industry, it was proposed that some £2,500,000 should, in effect, be handed back to the industry, part of it going to the exhibitors but the greater part going to the producers by means of an extension of what is known as the Eady plan, under which there is a levy on the exhibitors and a sum is paid over to the British producers.
I also explained, when I made this announcement in my Budget speech, that.


of course, there would have to be discussions with the industry on the details. of this plan. I might add that in any case discussion would have been necessary, because the original Eady plan came to an end this year and we naturally wished to extend it. Those discussions have taken place, and I am glad to say that we have now reached agreement with all parts of the industry. In effect, the new Schedule does embody, so far as the tax arrangements are concerned, the agreement we have reached with the industry.
In explaining the Schedule, I wish, first of all, to remind the House that here we really have three objects. We want to raise some extra revenue; we want to help the producers, and we want, I think, to do justice to the claims of the exhibitors. Let me say at once that when we entered into these negotiations we contemplated it would only be necessary to allow quite a small sum to the exhibitors; but they satisfied us that they had a stronger case, and, as will be seen when I have explained them, the new proposals give them a great deal more.
The new agreement, to which I will now turn, provides in the Schedule for the following arrangements. First, we are not proposing to impose any duty on either the 6d. or 7d. seats. I am glad that is so, because during our earlier discussions on this matter a number of hon. Members particularly asked that, if possible, we should avoid imposing the duty on these seats. Secondly, we are making no change whatever in the duty on the 8d. to 10d. seats. Thirdly, in the case of the 1s. seats, we are actually reducing the duty by 1d., which sum is going to the exhibitors.
6.0 p.m.
I will not take all the changes, but I will mention a few of the more important. In the case of the 1s. 3d. seats, there is no change in the duty. In the case of the 1s. 6d. and 1s. 9d. seats, the duty is reduced by one-halfpenny. In the case of the 2s. seats there is no change. Broadly speaking, therefore, either there is actually a reduction in the duty or there is no change in the relevant prices up to 2s. The significance of that will be apparent in a moment or two. When we go above the 2s. level, then the duty

increases and rises by 2d., 3d., 4d. and 5d. up the scale, the 5d. increase, of course, being for the very expensive cinema seats.
The House will appreciate that in imposing these rates of duty, we do not ourselves here determine the prices which exhibitors, or other proprietors in the case of other entertainments, will charge for their seats. That is a matter they themselves will decide in the light of what they think is proper. They will no doubt do so according to whether they see an advantage in adjusting a particular price for a particular seat or not.
In the case of entertainments other than cinemas, I think it is quite plain that up to 2s. there is no particular reason why they should alter the present prices at all. Indeed, they get certain advantages where the duty is reduced so that the net takings of the proprietors are improved. As to what they do above that level—I am speaking now of non-cinema entertainments, of greyhound racing, horse racing and speedway racing—it turns on what they regard as giving them the best return.
I will return to their position later if I may, and deal now with the cinemas. There is another consideration which has to be borne in mind. It is, in accordance with what I said a little while ago, that we have made arrangements for the Eady scheme to be extended not merely to one year but for another three years. That is a very satisfactory result, because it gives the producing side of the industry a security which it lacked previously.
Under that scheme, above 1s. the levy to be paid to the producer is ¾d. as against ¼d. in the first year that began with the Eady scheme last year. Below 1s. the levy remains at ¼d. as last year. The effect of the levy, taken with the new Schedule, I think will be to induce the exhibitors to raise the prices of some seats below the 2s. level and put them into the next highest grade. I am speaking only of cinemas. It becomes profitable for them to do that because they have to find the extra½d. under the Eady scheme. Otherwise there would be no reason for them to alter prices at all.
That is the reason why in the case of cinemas we may expect an increase not below 1s. but in the 1s. 3d., 1s. 6d. and 1s. 10d. seats. It is because the imposi-


tion of the levy for the benefit of the producing side of the industry makes it profitable for them to put up prices, whereas in the case of other entertainments there is no levy and therefore not the same incentive for them to put up prices.
If I may sum up that part of what I have to say as far as prices are concerned, the outcome of all this can be described as follows. Whereas the original proposals would have involved an increase of 1d. on the 6d. and 7d. seats and of 1d. on the 8d. and 9d. seats and 2d. for the 10d. and 1s. seats, there will be no increases in prices at all up to that level but, as I mentioned, in the case of the 1s. 3d. to 2s. 10d. seats there will be an increase of 3d. instead of 2d. In the case of the 3s. to 5s. 7d. seats there will be an increase by 4d. instead of 3d. and above that, in the very expensive seats, by 5d. instead of by 4d. or 5d. as the case might be. As to how the small cinemas are affected—

Mr. Charles Williams: When does the new scheme come into operation?

Mr. Gaitskell: On 5th August. That is the desire of the whole industry and it is our desire as well, because otherwise we lose Revenue.
The House might like to know how the small cinemas are affected. We have done everything we can to help them. I have already mentioned that there is no increase in the duty on the cheaper seats, and, indeed, there are some reductions. Therefore, as far as the general case of the smaller cinemas is concerned—and they are the ones which have the cheaper seats—they have definite net gains under these arrangments. Furthermore, it will be noted that there is no additional levy on seats below 1s. Therefore, on the 1s. seats there is a gain of 1d. which is retained wholly by the small exhibitor.
The arrangement made last year that cinemas taking less than £125 a week should be exempt from the levy in any such week continues and finally—maintaining the position—there is no duty at all on the cheaper seats at 6d., 7d. and below. Therefore, I think we can reasonably say we have taken very great care to help the smaller cinemas as far as we can.
The effect of all this is to bring in an extra £12½ million of revenue as against

£10 million in the Budget proposal. virtually all the increases being in the expensive seats, of which the Exchequer receives £6½ million against £7½ million in the original proposals. The producers will receive £2.3 million and the exhibtors will receive gross £3.7 million, or perhaps £1 million less than that after the deduction of foreign film hire. Taking the new arrangements and last year's arrangements, the industry as a whole will have obtained £8½ million more than it was getting before, and the producers will receive £3½ million and the exhibitors, before deducting film hire, about £5 million.

Mr. R. S. Hudson: Would the right hon. Gentleman mind repeating that?

Mr. Gaitskell: If one took the arrangements made last year under the Eady plan as well as the arrangements this year, the industry would be receiving about £8½ million, of which the producers would receive £3½ million. The exhibitors would get the remainder minus the cost of film hire, which is a slightly uncertain figure but which I put at £1 million.

Mr. Hudson: They would be left with £2.7 million?

Mr. Gaitskell: On this year they would be left with about £2.7 million after deducting film hire. I think it is of great importance that we should have managed to reach agreement on the levy scheme and that it should continue for another three years. If there should be any change in the methods of collecting Entertainments Duty resulting from discussions which I said we would have with the industry, it is agreed with all the parties concerned that by some means or other we should secure that that £3½ million, which is the figure for two years taken together, should be guaranteed, as it were, to the production side of the industry. I believe that provides a real opportunity for them to get on to a paying basis without any further assistance from the Government.
I should like to pay my tribute to the four associations in the trade. They have certainly driven a hard bargain with us and we have had a lot of argument about it, but I think it is reasonably satisfactory in outcome, and I am particularly pleased that we are able to continue this arrangement and extend it for the producer.
I should like to refer briefly to the other entertainment industries, They, of course, gain something on the cheaper seats because the duty is reduced on certain of those and not increased on others. What they will do about the prices above 2s. I do not know, but there is no reason why they should lose anything on them. They can, of course, put up the price by the amount of duty precisely and take the same themselves, or they can put it up by more than the duty and take 1d. on each seat if they think it pays them to do so.
I thus claim that the Financial Secretary's promise in speaking on the matter of speedways, that they would not have to put up their prices at all on these lower-priced seats unless they wanted to, is amply borne out, and indeed, more than borne out, by the arrangements we have made. The same, broadly speaking, applies to the other two industries, horse racing and dog racing, though of course I must admit in their case that I understand the prices are generally higher, and therefore the benefit of the reduction in duty on the lower-priced seats would be proportionately less important to them than it is to the speedways.
I would finally remind the House of the undertaking we gave to review the whole structure of the Entertainments Duty between now and next year. We appreciate the difficulties. I would emphasise again, however, that it may not be so very easy to find a simple solution to this problem, but we will certainly do our best in consultation with the various interests concerned.

Mr. R. S. Hudson: I think all quarters of the House must be indebted to the right hon. Gentleman and his officials for having spent so much time in successfully reaching the compromise which is before us today and which has been agreed by all sides of the industry. One might also hope that it is a good augury for the future, for I believe this is the first time in very many years that all sides of the industry have actually come together and have negotiated as a body with the Chancellor of the Exchequer.
As I said when we were discussing this matter in Committee, the difficulty in which the exhibitors have been till now has always been that they could not raise the price to the public by, let us say, 1d.

without at the same time incurring a disproportionate liability for increased Entertainments Duty. Although no material increase in the amount the public are expected to pay arises from this compromise, the new arrangement at least gives the proprietors of the cinemas and the producers a substantial part of what they have long claimed to be fair.
The right hon. Gentleman said that this would help the small cinemas. I think it rather depends on the definition of the word "small," because I gather that the proprietors of some of the smaller cinemas, or the smallest cinemas, feel that they are not getting anything particular out of this. For example, under the Finance Act, 1948, exemption was granted in cases where they did not have more than 400 seats and they were in areas with not more than 2,400 population or 640 to the square mile.
I gather there are a certain number of marginal cases which cannot take advantage of that arrangement because the population is slightly greater than the agreed figure, and I am not quite sure even now whether those small cinemas—the smallest of them all—will benefit from these concessions. I have no doubt that the slightly larger ones in the industrial towns will definitely benefit, but I think there are still a certain number of very small cinemas the proprietors of which may find themselves in financial difficulty, or so I am advised.
6.15 p.m.
I am sure that the industry as a whole will loyally do its best to carry out this agreement in the spirit in which the Chancellor has met them, but whether or not the Chancellor gets the money he expects is a matter which only time can tell. He anticipates that the public are going to pay a net increase of £12½ million. There was some talk during the Committee stage of a reduction in cinema receipts following reduced attendances, and it will be remembered that the Chancellor threw doubt on this and said that his figures showed, on the whole, that cinema attendances were being well maintained. Again, we shall only know after the lapse of months.
I think the Chancellor has this point in favour of the position he took up, namely, that if we compare the prices of cinema seats over the last few years with the rise in the prices of most things we have to buy, then cinema seats definitely


stand out as not having gone up to anything like the same extent; they are relatively the cheapest things in relation to other goods which we all have to buy, whether necessities or pleasures. They stand out as articles which have not gone up in price in anything like the same ratio. It may, therefore, well be true—I only hope it is true, from his point of view and that of the National Revenue—that the attendances will not fall to the extent that some people think. The test, of course, will come on and after 5th August.
It is quite true that the prices of seats of 1s. or less will not go up, but the prices of seats over 1s. will go up at least 3d. The great question to which cinema owners and the Chancellor will want to know the answer is whether the man who has hitherto paid, for example, 1s. 10d. for his seat is now going to fall back on the 1s. 6d. seat or whether he will be willing to pay the new price for the 1s. 10d. seat, which is 2s. 1d. Only time can show. There is such a thing as the law of diminishing returns. Whether that will apply here, as the cinema industry think it will, remains to be seen. All I can say is what I said a little earlier, that they intend loyally to try to see that this experiment is properly carried out so that the Chancellor can get his money.
As far as the exhibitors are concerned, according to the Chancellor today they will get a net figure of £2.7 million. I confess the arithmetic is very complicated, and I thought after discussion with them that they were going to keep just over £3 million, but if the Chancellor says they will only get £2.7 million, it strengthens what I am about to say. Out of that £2.7 million the first call is to meet the admittedly steadily rising costs to which the exhibitors are subject, and which I think the Chancellor admitted today were definitely items that had to be covered unless a large number of the exhibitors were to go bankrupt.
When that has been met, the next item is the question of increased remuneration and wages for the cinema employees. When we were discussing this in Committee, it was suggested in some quarters of the Committee that the figures were on the low side. I confess that, listening to them for the first time, I wondered, if the figures were really correct and were so low, how in a state of full employment the cinema exhibitors were able to get any staff at all.

The solution to the problem, I am told, is that the figures quoted in several sections of the Committee were the minimum figures set out in an agreement already some months or years old, and that in fact over a large range of the operatives concerned the exhibitors already pay more. In any case, £2.7 million is the figure of the total money in the kitty to be divided between increased costs and increased remuneration.

Mr. Gaitskell: I am not quite sure what the right hon. Gentleman means by increased costs. If he includes the cost of film hire, the figure would be £3 million.

Mr. Hudson: We discussed in Committee the question of depreciation and of bringing cinemas up to the necessary standard. I have forgotten the exact figure, but we have been told of the cost involved over the next three years to bring cinemas up to a standard to comply with the new Home Office requirements about safety against fire. Those are the ordinary costs of exhibiting, quite apart from the question of film hire, so that £2.7 million is the net figure after the exhibitors have paid increased film hire to the producers.
There is only one further point I wish to make, and it concerns the right hon. Gentleman's reference to the levy. I think he will bear me out in this; it is essential to bear in mind the importance of the word "only." This is an agreement by the exhibitors to pay the levy for three years, and for three years only. It is impossible to know what the future may have in store for them but, as I understand it, the exhibitors feel—and I think the Government hold the same view—that if the producers are given this figure of something over £2,500,000—

Mr. Gaitskell: £2.3 million.

Mr. Hudson: If they are given this figure between £2 million and £2,500,000 for their share of revenue for the next three years, then, as far as human forecast can go, that should be sufficient to put them on their feet and to make it unnecessary for them to come back, either to the House or to the exhibitors, and ask for further finance. I believe that is the Government's understanding of the position, and that that is the exhibitors' understanding of it; and I can only hope that what is forecast will prove to be the case.
Finally, I should like to repeat what said at the beginning—that all sides are indebted to the Chancellor and his officials for finding this way out of the difficulty, and especially to the Chancellor for reiterating his promise to us to see whether some improvement can be made in the structure of the Entertainments Duty, difficult though all sides of the House realise that to be.

Mr. J. N. Browne: I listened with great interest to the Chancellor's speech. Perhaps I should declare an interest in this subject, for some 26 years ago I was the manager of a cinema, and since then I have been connected in some way or another, and still am, with nearly every form of open-air sport on which Entertainments Duty is imposed. I welcome this new scale, especially for Scotland, because in Scotland there is one seat to every nine people, as the Chancellor knows, whereas there is one to every 12 in England; and we were very worried about the effect of the original scale.
We are very glad to see that the lower-priced seats are remaining unchanged. I am glad to see that the Chancellor at last realises what the entertainments industry has known for years that—the whole system of Entertainments Duty is unsatisfactory. In this House and in the country we are accustomed to devices for artificially keeping, alive industries which are being strangled by taxation, and this is only another example.
I want to examine for a minute the causes which brought about this change of heart in the Chancellor. As we all know, the original proposals were savage and unacceptable. As a consequence, the Chancellor negotiated with the cinema industry and studied the special conditions of that industry. As recently as 5th June, 1951, the Financial Secretary to the Treasury said:
We have made a counter proposal roughly on the basis that seats up to Is. remain at the pre-Budget price…
Let hon. Members mark that—seats up to 1s. The Financial Secretary continued:
but that the more highly priced seats go up by rather more than was originally proposed."—[OFFICIAL REPORT, 5th June, 1951; Vol. 488. c. 944.]

At that time, as recently as 5th June, the Financial Secretary could not have been aware of the implications of those remarks, because horse racing, speedway racing, greyhound racing and a host of other entertainments are tied to the cinema scale. These entertainments are only occasional, whereas the cinema provides a continuous performance every day. Yet the right hon. Gentleman negotiated with the cinema industry for a scale to suit a great range of entertainments.
The cinema industry is faced with rising costs and more or less static revenue, as the right hon. Gentleman knows. Other entertainment industries which have to pay tax are faced with rising costs and a steadily falling revenue. He could not move any entertainment to the low scale. There is such a wide gap between one rate of tax and another. It is as though the Purchase Tax scale of 100 per cent. then dropped straight down to 33 per cent. The right hon. Gentleman has done his best and the whole industry appreciates it; he has left alone the present rates up to 2s. and has placed what is roughly a 2 per cent. increase on the rest of the scale, but he has left us with what is one of the most astonishing and illogcal systems of taxation which this country has ever devised.
I say to the Chancellor, "Please do not attempt again to revise the scale." In my view there should be at least three scales. There should be one for the cinema industry, with its peculiar conditions of continuous performance, and the Chancellor should quite rightly negotiate on the needs of that industry. There should be another scale for theatres and similar entertainments, where there should be the lowest rate of tax. There should be a third scale, in the middle, for those entertainment industries which are occasional and are limited, like dog racing, horse racing or speedway, by the weather or by circumstances. There should be three scales and not two, and then we should begin to get something like fair treatment in the entertainments industry.
I turn for a moment to the new scales to mention some of the peculiarities which they offer. If a proprietor wants to charge the public 5s. admission, he cannot do it. It is not possible to charge 5s. admission. He must charge 4s. 11d. and, out of the


4s. 11d., he gets 2s. 7½d. Supposing he wants 2s. 8d. instead of that 2s. 7½ He immediately attracts a tax of 2s. 9d. and he must charge 5s. 5d., for there is no such thing as a 5s. charge in Britain.
There is a wide gap in the possible prices available to the entertainments industry, and these wide gaps create serious problems. There is a gap of 5d. between 2s. 7d. and 3s., which are popular prices. Again, on the higher prices, there is a gap of 8d. between 4s. 2d. and 4s. 10d.; and a gap of 11d. between 4s. 11d. and 5s. 10d. Between 4s. 2d. and 5s. 10d. there is a difference of 1s. 8d. and in that great range of prices, in the 1s. 8d., there are only two available prices—4s. 10d. and 4s. 11d., which themselves differ by one penny.
I think it should be possible to charge any admission price. Looking at what I have said in another way, the present position is this. Between the prices of 9d. and 6s. 6d., which is what the great mass of people of this country pay, one would expect to be able to charge admission prices according to the entertainment provided and the show put on. Between 9d. and 6s. 6d. there are 69 possible penny stages. The Chancellor proposes to give us 23 different prices. If these were 23 threepenny stages, people would say that should be all right, but it is not so because there are nine pairs of prices differing only by a penny. In effect, we have only 15 possible prices between 9d. and 6s. 6d. which we can charge in the entertainments industry. Yet the Chancellor has just said that it is left to the industry to determine the price. It is not left to the industry; it is left to the Chancellor of the Exchequer.
I come to my second suggestion about the Entertainments Duty. It should be expressed in terms of a percentage upon the admission price charged, so that any price at all could be charged to the public. Only in that way would the public get the benefit of competition in entertainments, which they do not get under the present system. The Customs should find this practicable. They can collect the total amount of Entertainments Duty paid on the number of admissions for a particular show or for a week. It could be done as easily as the Pool Betting Duty is collected. As far as I can see it presents no problem of administration.
6.30 p.m.
What of the future? If the Chancellor is still the Chancellor next time we have to deal with Entertainments Duty, and if he approaches the problem in the spirit which he has brought to these scales at this time, I can assure him that the whole industry will co-operate with him. The public expect to pay fair entertainment prices; and the people providing an entertainment expect to pay a fair amount of tax, and to get only sufficient for a fair reward and to put on a proper show; all parties know that the country needs the tax. All we ask is that the bungling of the Treasury shall not again be allowed to upset the whole of the entertainments industry. We do not want to come again to the House asking for concessions. We want a new deal.

Captain Duncan: As I was one of those who raised the question of the cinema industry during the Committee stage of the Bill, I should like to thank the Chancellor of the Exchequer for the way in which he has obtained agreement in the industry which will give it some relief. I am not in a position to say that that relief will be sufficient. My right hon. Friend the Member for Southport (Mr. R. S. Hudson) referred to some of the things that the cinemas will have to do to try to recoup themselves and to recover the position that the cinema industry had before. He referred to increased costs; he referred to increasing remuneration for the workers.
However, the particular cinemas which I know have also got to wipe out losses that they have had in the last few years. Only last week I heard from one group in my constituency who said that they had had such an increase of burdens last year that they were thinking of selling one of their cinemas. It is a more serious position than even I thought or even the Chancellor thought when we started these discussions in Committee. I am glad to note that the right hon. Gentleman did say that he found, on going into the matter—as I have found—that the cinemas were in a more difficult position than anyone had realised.
So we leave it this year, but I make no promise that I shall not return to the charge next year if we find that the reliefs given this year, amounting in gross to £3,700,000, to the exhibitors are not enough. In addition, we shall look forward to any changes in the method of


levying Entertainments Duty that the Chancellor can devise and which may prove fair to all concerned. This is a very difficult question. I have always been of the opinion that Entertainments Duty as such has not a high value compared with other taxes where relief is required. I spoke in Committee stage about this only because I was convinced, from the figures that I had seen, that it was urgently necessary for the very salvation of the cinema exhibitors that something should be done. I am very glad that it has been done.

Mr. C. Williams: I shall speak for only a very few minutes on this question, and not from the point of view of the cinema producers in any shape or even from the point of view of the Chancellor. The first thing that I should like to say is that I entirely agree with my hon. and gallant Friend the Member for Angus South (Captain Duncan), in welcoming the fact that those who go into the cheaper seats will undoubtedly not be inflicted at the present time with a new burden of taxation. I should like also to add how very sorry I am that the horse breeding industry—I shall not develop the point—has come out so badly in this question as compared with the cinema industry, and I only wish that horse racing and some of the other sports had had the good fortune of the highly organised cinema industry at the present time.
As far as I am concerned, I always welcome it when any British industry, as in this case, as the Chancellor said, can get concessions out of the Treasury. That is always welcome to me in any way, and the more the better. However, so far as I understood the Chancellor's figures, he expects, out of a total duty of £12,500,000, to get £6 million. Is that right? The other £7,500,000, in one way or another, goes to the industry. I think that is correct.

Mr. Gaitskell: We get £6,500,000, and the other £6 million goes to the industry.

Mr. Williams: Yes, roughly speaking. It is a very near thing. At any rate, something over £6 million really goes in tax, that is to say, that when hon. Gentlemen opposite who can afford, as so few of us on this side can, to go to the dearer seats, they will be paying

half of that money directly to the industry. I am not quarrelling with that, except that I do hope that the Chancellor, before he gave this subsidy to the industry, consulted the hon. Member for Wednesbury (Mr. S. N. Evans), because, after all, apparently cinemas are much cleverer at getting subsidies than the farmers, who have not been so lucky as the cinemas have been on this occasion.
I congratulate the cinema industry. I only wish that the ordinary people of this country whom I represent had come off better out of this. I say—and it is the last word I say on this—that I think that the taxpayers of this country, as invariably happens under this Chancellor of the Exchequer, come out of the position very, very badly. They have a new tax, and it has been deliberately put on at about the worst day of the year and at the worst season of the year for those of us—and we run into hundreds of thousands—who wish to try to make this country attractive to visitors from all over the world in August.

Amendment agreed to.

Clause 13.—(PURCHASE TAX (CHANGES IN RATES, ETC.).)

Mr. Jay: I beg to move, in page 8, line 34, at the end, to insert:
except that the amendments provided for by Part II of the said Fifth Schedule shall only have effect as from the twenty-fifth day of June, nineteen hundred and fifty-one.
The purpose of this Amendment is simply to ensure that the additional Purchase Tax exemptions on toothbrushes and one or two other items, put down by the Government following the Committee stage, should come into effect at the earliest practical date after the Amendments appeared on the Order Paper. That date was 25th June.

Amendment agreed to.

Clause 16.—(ALTERATIONS IN PERSONAL RELIEFS, ETC.)

Captain Ryder: I beg to move, in page 10, line 12, to the end, to insert:
and at the end of the said subsection (1) there shall be inserted the following words 'provided that where the claimant is a widow the allowance shall be ninety pounds.'
The object of this Amendment is to try to bring some relief to what, I think, is a very hard pressed section of the community, that is to say to widows who


have children in their care. I feel that this particular section of the community suffers under an anomaly as far as the matter of personal allowances is concerned. This anomaly has been going on for some time; but it has, of course, become far more apparent under the much higher rate of taxation, and become much more onerous in view of the rising cost of living.
I think that the simplest way I can present this case is to draw a comparison between two families, the one consisting of a man and his wife, and the other consisting of a widow with a child in her care. For the married man and his wife, under this Finance Bill the personal allowance is to be £190. The widow gets the single person's allowance of £110 with the addition of the children's allowance of £70, making a total of £180. Therefore, the widow is at a disadvantage to the tune of £10 compared with a married man and his wife and no children. Two single people living together have an aggregate personal allowance of £220. It will be seen, therefore, that the widow with a child is taxed at a higher rate in relation to personal allowances than any other section of the community.
It may be argued that this arises because the cost of clothing and feeding children is less than for adults, but I do not think that is a very sound argument. Children eat a great deal; their clothes have gone up in price very sharply; they grow out of their clothes much more quickly, and therefore need to buy more than adults; and they wear out their clothes very much more quickly than adults. That argument is a very doubtful one.
The main burden of the argument arises in comparing the financial strengths of the two families I have cited. I am sure the House will agree that the married man and his wife with no children to look after are in a far stronger position than the widow with a child in relation to earning a full day's wage. The married man and his wife are able to go out and earn a full day's wage, whereas the widow with a child of, say, 10 years of age may well find it extremely difficult to go out and earn a full day's wage, and will very likely only be able to undertake a part-time job. We should also consider the relative cost of getting to and from the place of work. Clearly.

when travelling to a place of work for a full day's wage, perhaps with a little overtime, the cost of the fare is relatively smaller than when travelling to do only a part-time job. On many scores it would seem that the widow with a child to look after is in need of special consideration.
In drafting this Amendment my hon. Friends and I thought that the best way of helping these people was to prescribe an increase in the children's allowance. Of course, we must also consider that after the children have grown up and left home the widow will be at a great disadvantage. She may well have reached the age when it is difficult for her to get the sort of job she would have been able to get had she had no children. It may be the considered view of the Treasury that this Amendment does not fully cover the case, and I should be very glad to consider any improvements the Financial Secretary may care to propose.
When I mentioned this matter in Committee we were told that this concession would cost the Treasury £1 million. It may be that the Treasury find they cannot afford £1 million, but when we remember the present scale of expenditure —I will not go through the long list of costly extravagances—the sum of £1million seems to me a relatively small figure, and one which I feel would be well spent in helping a particularly hard pressed section of the community.

6.45 p.m.

Mr. Martin Lindsay: I beg to second the Amendment.
My hon. and gallant Friend has argued the case for this Amendment so well that there is very little left for me to say. I earnestly trust that the Government will see fit to accept this Amendment. The figure of £1 million is a drop in the ocean out of the huge sum of £4,000 million which the Government are levying by taxation.
I am sure it is inequitable that the widow should be placed at a disadvantage compared with the married man. She not only has to go through life alone, without a man to stand by her, but many widows today find themselves in great financial difficulty owing to the rising cost of living. There is no doubt that widows have the same overheads in matters such as rent and rates as a married man living with his wife. I am sure we should not wish


her to be in an inequitable position. I hope that the Financial Secretary will now be able to rise in his place and say that the Government accept this Amendment. If not, I trust that my hon. and gallant Friend will think fit to press it to a Division.

Mr. Jay: The hon. and gallant Member for Merton and Morden (Captain Ryder) seeks, by this Amendment, to raise the children's allowance to £90 in cases where a widow is the claimant. I think that this Amendment, like many of those affecting Income Tax allowances, comes into the group which the hon. and gallant Member for Bristol, North-West (Lieut.-Commander Braithwaite) sometimes describes as "the parade" we go through in these debates on the Finance Bill. That is to say, it is brought forward very reasonably so that the merits and demerits, if any, may be paraded before the House, and the House and the Government can choose which of these cases seems to have the highest priority.
It is true that a persuasive case can be made, as the hon. and gallant Gentleman snowed, for the present Amendment, as for a number of the claimants for relief of this kind. In the debate on Thursday last we decided to accept an Amendment affecting the special earned income for married women, because that seemed to us to be of very high priority. In this case, though I agree that a claim for this particular group could be made out, it does not seem to us, in all the circumstances that the priority is so high.
The main difficulty, as I see it, is this. The hon. and gallant Gentleman compared the widow with a child with the married man and his wife with no child, and he argued that the latter was in a more favourable position for the purposes of Income Tax allowances. I agree to this extent, that the married couple, both earning, and without children are in a relatively favourable position for Income Tax purposes as a result of the series of changes we have made in the search for greater equity over the last few years. But I do not think that is the relevant comparison here. The relevant comparison is between the widow supporting a child and another single taxpayer with a child similarly dependent. It might be a widower, or an orphan brother or sister.

or a grandparent, or a number of different kinds of single taxpayer.

Captain Ryder: The comparison I was making, which I chose particularly, was that of two families both having two mouths to feed. The Financial Secretary has chosen to draw a comparison between the single person who has only one mouth to feed and one anatomy to cloth, with a family with two mouths to feed.

Mr. Jay: I am afraid that the hon. and gallant Gentleman misunderstood me. I was making the comparison between a widow with one child to support and a widower, for instance, with one child to support. If we were to increase the child allowance in the former case, I do not see how we could avoid having to increase it in the other. If we did not, we should create an anomaly much worse than any that might be said to exist now. Further, if we went so far as that, I doubt if we could stop there. I think we should be forced to increase the child allowance generally, which, no doubt, if the money were available, would be a logical thing to do. As the hon. and gallant Gentleman said, his Amendment would cost £1 million. To increase the child allowance in all cases to £90 would cost £27½ million in a full year, which is quite outside the range of any concession that we can grant.

Captain Ryder: In the case which the Financial Secretary mentioned a claim could be made for a housekeeper from other dependents allowances.

Mr. Jay: In certain rather narrowly-confined circumstances. As it seems to us that it would be impossible to defend the distinction between one single taxpayer with a child dependent upon him and another, I am afraid that this is not one of the Amendments that we can select for acceptance.

Lieut.-Commander Gurney Braithwaite: The Financial Secretary was good enough to refer to me, so may I say a few words? I do not think that the House can complain if we spend a little time on this very human problem, coming, as it does, after a concession to the cinema industry and other Amendments dealing with industrial matters and involving large amounts. The hon. Gentleman rested his case on


the fact that wider concessions might have to be made if he gave the concession for which we are asking. I suggest to him that the widow is in a different category to other people. My hon. and gallant Friend the Member for Merton and Morden (Captain Ryder) made that point extremely well. A widow is left lonely and very often she has a child to provide for.
This parade to which reference has been made is now nearing its end. Certain of these "march pasts" have caught the eye of the Chancellor and others have not. 1 hoped that the Chancellor might show a human touch about this matter and clear up this anomaly, as its cost is only

£1 million. If that is not to be the case, and as a large number of Amendments still remain to be dealt with, I would suggest to my hon. and gallant Friend that the best thing he can do is to impress this matter on the memory not only of this Government but of the Chancellor who is likely to bring in the next Budget by taking it to a Division and having on record the substantial number of hon. Members of this House who believe that this Amendment ought to have been accepted.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 262; Noes, 283.

Division No. 160.]
AYES
[6.55 p.m.


Aitken, W. T.
de Chair, Somerset
Hudson, Sir Austin (Lewisham, N.)


Amery, Julian (Preston, N.)
De la Bère, R.
Hudson, Rt. Hon Robert (Southport)


Amory, Heathcoat (Tiverton)
Deedes, W. F.
Hudson, W. R. A. (Hull, N.)


Arbuthnot, John
Digby, S. Wingfield
Hurd, A. R.


Ashton, H. (Chelmsford)
Dodds-Parker, A. D.
Hutchinson, Geoffrey (Ilford, N.)


Assheton, Rt. Hon. R. (Blackburn, W.)
Donner, P. W.
Hutchison, Lt.-Com. Clark (E'b'rgh W.)


Astor, Hon. M. L.
Douglas-Hamilton, Lord Malcolm
Hutchison, Col. James (Glasgow)


Baker, P. A. D.
Drayson, G. B.
Hyde, Lt.-Col. H. M.


Baldock, Lt.-Cmdr. J. M
Drewe, C.
Hylton-Foster, H. B.


Banks, Col. C.
Dugdale, Maj. Sir Thomas (Richmond)
Jennings, R.


Baxter, A. B.
Duncan, Capt. J. A. L
Johnson, Howard (Kemptown)


Beamish, Maj. Tufton
Dunglass, Lord
Jones, A. (Hall Green)


Bell, R. M.
Duthie, W. S.
Joynson-Hicks, Hon. L. W.


Bennett, Dr. Reginald (Gosport)
Eccles, D. M.
Kaberry, O.


Bennett, William (Woodside)
Elliot, Rt. Hon W. E
Kerr, H. W. (Cambridge)


Bevins, J. R. (Liverpool, Toxteth)
Errol, F. J.
Lambert, Hon. G


Birch, Nigel
Fisher, Nigel
Lancaster, Col. C. G


Bishop, F. P.
Fort, R.
Langford-Holt, J.


Black, C. W.
Foster, John
Law, Rt. Hon. R. K.


Boles, Lt.-Col. D. C (Wells)
Fraser, Hon. Hugh (Stone)
Leather, E. H. C.


Bossom, A. C.
Fraser, Sir I. (Morecambe &amp; Lonsdale)
Linnox-Boyd, A. T.


Boyd-Carpenter, J. A
Fyfe, Rt. Hon, Sir David Maxwell
Lindsay, Martin


Boyle, Sir Edward
Gage, C. H.
Linstead, H. N


Bracken, Rt. Hon. B
Galbraith, Cmdr. T. D. (Pollok)
Llewellyn, D.


Braine, B. R.
Gammans, L. D.
Lloyd, Rt. Hn. G. (King's Norton)


Braithwaite, Sir Albert (Harrow, W.)
Garner-Evans, E. H. (Denbigh)
Lloyd, Maj. Guy (Renfrew, E.)


Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)
Gates, Maj. E. E.
Lloyd, Selwyn (Wirral)


Bromley-Davenport, Lt.-Col. W
Glyn, Sir Ralph
Lockwood, Lt.-Col. J. C.


Brooke, Henry (Hampstead)
Gomme-Duncan, Col. A.
Longden, Gilbert (Herts, S.W.)


Browne, Jack (Govan)
Gridley, Sir Arnold
Low, A. R. W.


Buchan-Hepburn, P. G T
Grimston, Hon. John (St. Albans)
Lucas, Sir Jocelyn (Portsmouth, S.)


Bullock, Capt. M
Grimston, Robert (Westbury)
Lucas, P. B. (Brentford)


Bullus, Wing Commander E. E
Harden, J. R. E.
Lucas-Tooth, Sir Hugh


Burden, F. A.
Hare, Hon. J. H. (Woodbridge)
McAdden, S. J.


Butcher, H. W.
Harris, Frederic (Croydon, N.)
McCorquodale, Rt. Hon. M. S.


Butler, Rt. Hn. R. A. (Saffron Walden)
Harris, Reader (Heston)
Macdonald, Sir Peter (I. of Wight)


Carr, Robert (Mitcham)
Harvey, Air Codre. A. V. (Macclesfield)
Mackeson, Brig. H. R.


Carson, Hon. E.
Harvey, Ian (Harrow, E.)
McKie, J. H. (Galloway)


Channon, H.
Harvie-Watt, Sir George
Maclay, Hon. John


Churchill, Rt. Hon. W. S.
Hay, John
Maclean, Fitzroy


Clarke, Col. Ralph (East Grinstead)
Head, Brig. A. H.
MacLeod, lain (Enfield, W.)


Clarke, Brig. Terence (Portsmouth, W.)
Heald, Lionel
MacLeod, John (Ross and Cromarty)


Cooper, Sqn. Ldr. Albert (Ilford, S.)
Henderson, John (Cathcart)
Macmillan, Rt. Hon. Harold (Bromley)


Cooper-Key, E. M.
Hicks-Beach, Maj. W. W.
Macpherson, Major Niall (Dumfries)


Corbett, Lt.-Col. Uvedale (Ludlow)
Higgs, J. M. C.
Maitland, Cmdr. J. W.


Craddock, Beresford (Spelthorne)
Hill, Mrs. E. (Wythenshawe)
Manningham-Buller, R. E


Cranborne, Viscount
Hill, Dr. Charles (Luton)
Marlowe, A. A. H


Crookshank, Capt. Rt. Hon. H. F. C
Hinchingbrooke, Viscount
Marples, A. E.


Crouch, R. F.
Hirst, Geoffrey
Marshall, Douglas (Bodmin)


Crowder, Capt. John (Finchley)
Holmes, Sir Stanley (Harwich)
Marshall, Sidney (Sutton)


Crowder, Petre (Ruislip—Northwood)
Hope, Lord John
Maude, Angus (Ealing, S.)


Cundiff, F. W.
Hopkinson, Henry
Maude, John (Exeter)


Cuthbert, W. N.
Hornsby-Smith, Miss P.
Maudling, R.


Darling, Sir William (Edinburgh, S.)
Horsbrugh, Rt. Hon. Florence
Medlicott, Brig. F.


Davidson, Viscountess
Howard, Gerald (Cambridgeshire)
Mellor, Sir John


Davies, Nigel (Epping)
Howard, Greville (St. Ives)
Molson, A. H. E




Monckton, Sir Walter
Robson-Brown, W
Teeling, W.


Morrison, John (Salisbury)
Rodgers, John (Sevenoaks)
Thomas, J. P. L. (Hereford)


Morrison, Rt. Hon. W. S (Cirencester)
Roper, Sir Harold
Thompson, Kenneth Pugh (Walton)


Mott-Radclyffe, C. E
Ropner, Col. L.
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Nabarro, G.
Russell, R. S.
Thorneycroft, Peter (Monmouth)


Nicholls, Harmar
Ryder, Capt. R. E. D.
Thorp, Brig. R. A. F.


Nicholson, G.
Salter, Rt. Hon. Sir Arthur
Tilney, John


Noble, Cmdr. A. H P
Sandys, Rt. Hon. D.
Touche, G. C.


Nugent. G. R. H.
Savory, Prof. D. L.
Turner, H. F. L.


Nutting, Anthony
Scott, Donald
Turton, R. H.


Oakshott, H. D.
Shepherd, William
Vane, W. M. F


Odey, G. W.
Smiles, Lt.-Col. Sir Walter
Vosper, D. F.


O'Neill, Rt. Hon. Sir Hugh
Smithers, Peter (Winchester)
Wade, D. W.


Ormsby-Gore, Hon. W. D.
Smithers, Sir Waldron (Orpington)
Wakefield, Edward (Derbyshire, W.)


Orr, Capt. L. P. S.
Smyth, Brig. J. G. (Norwood)
Wakefield, Sir Wavell (Marylebone)


Orr-Ewing, Charles Ian (Hendon, N,)
Snadden, W. McN.
Walker-Smith, D. C.


Orr-Ewing, Ian L. (Weston-super-Mare)
Soames, Capt. C.
Ward, Hon. George (Worcester)


Osborne, C.
Spearman, A. C. M.
Ward, Miss I. (Tynemouth)


Perkins, W. R. D.
Spence, H. R. (Aberdeenshire, W.)
Waterhouse, Capt. Rt. Hon. C


Peto, Brig. C. H. M
Spens, Sir Patrick (Kensington, S.)
Watkinson, H.


Pickthorn, K.
Stanley, Capt. Hon. Richard (N. Fylde)
Wheatley, Maj. M. J. (Poole)


Pitman, I. J.
Stevens, G. P.
White, Baker (Canterbury)


Powell, J Enoch
Steward, W. A. (Woolwich, W.)
Williams, Charles (Torquay)


Price, Henry (Lewisham, W.)
Stewart, Henderson (Fife, E.)
Williams, Gerald (Tonbridge)


Prior-Palmer, Brig. O
Stoddart-Scott, Col. M.
Wills, G.


Profumo, J. D
Storey, S.
Wilson, Geoffrey (Truro)


Raikes, H. V.
Strauss, Henry (Norwich, S.)
Winterton, Rt. Hon. Earl


Rayner, Brig. R
Stuart, Rt. Hon. James (Moray)
Wood. Hon R


Redmayne, M.
Studholme, H. G.



Remnant, Hon. P
Summers, G. S.
TELLERS FOR THE AYES:


Renton, D. L. M.
Sutcliffe, H.
Major Conant and


Roberts, Maj. Peter (Heeley)
Taylor, Charles (Eastbourne)
Mr. T. G. D. Galbraith.


Robinson, Roland (Blackpool, S.)
Taylor, William (Bradford, N.)





NOES


Acland, Sir Richard
Corbet, Mrs. Freda (Peckham)
Greenwood, Anthony (Rossendale)


Adams, Richard
Cove, W. G.
Greenwood, Rt. Hon. Arthur (Wakefield)


Albu, A. H.
Craddock, George (Bradford, S.)
Grenfell, Rt. Hon. D. R.


Allen, Arthur (Bosworth)
Crawley, A.
Grey, C. F.


Allen, Scholefield (Crewe)
Crosland, C. A. R
Griffiths, David (Rother Valley)


Anderson, Alexander (Motherwell)
Crossman, R. H. S.
Griffiths, Rt. Hon. James (Llanelly)


Anderson, Frank (Whitehaven)
Cullen, Mrs. A
Griffiths, W. (Manchester Exchange)


Attlee, Rt. Hon. C. R
Daines, P
Gunter, R. J.


Awbery, S. S.
Dalton, Rt. Hon. H.
Haire, John E. (Wycombe)


Ayles, W. H.
Darling, George (Hillsborough)
Hale, Joseph (Rochdale)


Bacon, Miss Alice
Davies, A. Edward (Stoke, N.)
Hale, Leslie (Oldham, W.)


Baird, J.
Davies, Ernest (Enfield, E.)
Hall, Rt. Hon. Glenvil (Colne Valley)


Balfour, A.
Davies, Harold (Leek)
Hall, John (Gateshead. W.)


Barnes, Rt. Hon. A. J
Davies, Stephen (Merthyr)
Hamilton, W. W.


Bartley, P.
de Freitas, Geoffrey
Hardy, E. A.


Bellenger, Rt. Hon. F. J.
Deer, G.
Hargreaves, A


Bonn, Wedgwood
Delargy, H. J.
Hastings, S.


Benson, G.
Diamond, J.
Hayman, F. H.


Beswick, F.
Dodds, N. N.
Henderson, Rt. Hon. A. (Rowley Regit)


Bevan, Rt. Hon. A. (Ebbw Vale)
Donnelly, D.
Hewitson, Capt M


Bing, G. H. C.
Dugdale, Rt. Hon. John (W. Bromwich)
Hobson, C. R


Blenkinsop, A.
Dye, S.
Holman P.


Bryton, W. R
Ede, Rt. Hon. J. C
Holmes, Horace (Hemsworth)


Boardman, H
Edelman, M
Houghton, D


Booth, A
Edwards, John (Brighouse)
Hoy, J.


Bottomley, A. G.
Edwards, Rt. Hon. Ness (Caerphilly)
Hubbard, T.


Bowden, H. W.
Edwards, W. J. (Stepney)
Hudson, James (Ealing, N.)


Bowles, F. G. (Nuneaton)
Evans, Albart (Islington, S.W.)
Hughes, Emrys (S. Ayrshire)


Braddock, Mrs. Elizabeth
Evans, Edward (Lowestoft)
Hughes, Hector (Aberdeen, N.)


Brook, Dryden (Halifax)
Evans, Stanley (Wednesbury)
Hynd, H. (Accrington)


Brooks, T. J. (Normanton)
Ewart, R.
Hynd, J. B. (Attercliffe)


Broughton, Dr. A. D. O
Fernyhough, E.
Irvine, A. J. (Edge Hill)


Brown, Thomas (Ince)
Field, Capt. W. J.
Irving, W. J. (Wood Green)


Burke, W. A.
Fletcher, Eric (Islington E)
Isaacs, Rt. Hon. G. A.


Burton, Miss E.
Follick, M.
Janner, B.


Butler, Herbert (Hackney, S.)
Foot, M. M
Jay, D. P. T.


Callaghan, L. J
Forman, J. C.
Jeger, George (Goole)


Carmichael, J.
Fraser, Thomas (Hamilton)
Jeger, Dr. Santo (St. Pancras, S.)


Castle, Mrs. B. A.
Freeman, John (Watford)
Jenkins, R. H.


Champion, A. J.
Freeman, Peter (Newport)
Johnson, James (Rugby)


Chetwynd, G. R
Gaitskell, Rt. Hon. H. T. N.
Johnston, Douglas (Paisley)


Clunie, J.
Ganley, Mrs. C. S.
Jones, David (Hartlepool)


Cocks, F. S.
George, Lady Megan Lloyd
Jones, Frederick Elwyn (West Ham, S.)


Coldrick, W.
Gibson, C. W.
Jones, Jack (Rotherham)


Collick, P.
Gilzean, A.
Jones, William Elwyn (Conway)


Cook, T. F.
Glanville, James (Consett)
Keenan, W.


Cooper, Geoffrey (Middlesbrough, W.)
Gooch, E. G.
Kenyon, C.


Cooper, John (Deptford)
Gordon-Walker, Rt. Hon P. C
Key, Rt. Hon. C W







King, Dr H. M.
Meal, Harold (Bolsover)
Strauss, Rt. Hon. George (Vauxhall)


Kinghorn, Sqn. Ldr. E
Oldfield, W. H.
Stross, Dr. Barnett


Kinley, J.
Oliver, G. 'H.
Summerskill, Rt. Hon. Edith


Lang, Gordon
Orbach, M.
Sylvester, G. O.


Lee, Frederick (Newton)
Padley, W. E
Taylor, Bernard (Mansfield)


Leo, Miss Jennie (Cannock)
Paget, R. T.
Taylor, Robert (Morpeth)


Lever, Harold (Cheetham)
Paling, Rt. Hon. W. (Dearne Valley)
Thomas, David (Abe[...]dare)


Lever, Leslie (Ardwick)
Pannell, T. C.
Thomas, George (Cardiff)


Lewis, Arthur (West Ham, N.)
Pargiter, G. A
Thomas, Iorwerth (Rhondda, W.)


Lewis, John (Bolton, W)
Parker, J.
Thomas, Ivor Owen (Wrekin)


Lindgren, G. S.
Paton, J.
Thorneycroft, Harry (Clayton)


Lipton, Lt.-Col. M
Pearson, A.
Thurtle, Ernest


Logan, D. G.
Peart, T. F.
Timmons, J.


Longden, Fred (Small Health)
Popplewell, E
Tomney, F.


McAllister, G.
Porter, G.
Turner-Samuels, M.


MacColl, J. E.
Price, Joseph T. (Westhoughton)
Ungoed-Thomas, Sir Lynn


McGhee, H. G.
Price, Philips (Gloucestershire, W)
Usborne, H.


McGovern, J.
Proctor, W. T.
Vernon, W. F.


McInnes, J.
Pryde, D. J.
Viant, S. P.


Mack, J. D.
Pursey, Cmdr. H
Watkins, T. E.


McKay, John (Wallsend)
Rankin, J.
Webb, Rt. Hon. M. (Bradford, C)


Mackay, R. W. G. (Reading, N.)
Reel, Mrs. D.
Weitzman, D.


McLeavy, F.
Reeves, J.
Wells, Percy (Faversham)


Macmillan, Malcolm (Western Isles)
Reid, Thomas (Swindon)
Wells, William (Walsall)


McNeil, Rt. Hon. H.
Reid, William (Camlachie)
West, D. G.


MacPherson, Malcolm (Stirling)
Richards, R
Wheatley, Rt. Hn. John (Edinb'gh, E.)


Mainwaring, W. H.
Robens, Rt. Hon. A.
White, Mrs. Eirene (E. Flint)


Mallalieu, E. L. (Brigg)
Roberts, Goronwy (Caernarvonshire)
White, Henry (Derbyshire, N.E.)


Mallalieu, J. P. W (Huddersfield, E.)
Robertson, J. J. (Berwick)
Whiteley, Rt. Hon. W.


Mann, Mrs. Jean
Robinson, Kenneth (St. Pancras, N.)
Wigg, G.


Marquand, Rt. Hon H. A
Rogers, George (Kensington, N.)
Wilcock, Group Capt. C. A. B


Mathers, Rt. Hon. G
Royle, C.
Willey, Frederick (Sunderland)


Mayhew, C. P
Shackleton, E. A. A.
Willey, Octavius (Cleveland)


Mellish, R. J
Shinwell, Rt. Hon. E.
Williams, David (Neath)


Messer, F.
Shurmer, P. L. E.
Williams, Rev. Llywelyn (Abertillery)


Middleton, Mrs. L
Silverman, Julius (Erdington)
Williams, Ronald (Wigan)


Mikardo, Ian.
Silverman, Sydney (Nelson)
Williams, W. T. (Hammersmith, S.)


Mitchison, G. R
Simmons, C. J.
Wilson, Rt. Hon. Harold (Huyton)


Moeran, E. W
Slater, J.



Monslow, W.
Smith, Ellis (Stoke, S.)
Winterbottom, Ian (Nottingham, C.)


Moody, A. S.
Smith, Norman (Nottingham, S.)
Winterbottom, Richard (Brightside)


Morgan, Dr. H. B
Sorensen, R. W.
Wyatt, W. L.


Morley, R.
Soskice, Rt. Hon. Sir Frank
Yates, V. F.


Morris, Percy (Swansea, W.)
Sparks, J. A.
Younger, Rt. Hon. K


Morrison, Rt. Hon. H (Lewisham, S.)
Steele, T.



Mort, D. L.
Stewart, Michael (Fulham, E)
TELLERS FOR THE NOES:


Moyle, A.
Stokes, Rt. Hon. R. R
Mr. Hannan and Mr. Wilkins.


Nally, W.
Strachey, Rt. Hon. J.

Clause 17.—(SUSPENSION OF INITIAL ALLOWANCES.)

Mr. R. A. Butler: I beg to move. in page 10, line 40, to leave out subsection (1) and to insert:
(1) In relation to expenditure incurred on or after the sixth day of April, nineteen hundred and fifty-two, for the provision of plant and machinery for the purposes of a trade, subsections (1) and (3) of Section twenty of the Finance Act, 1949 (which increased the initial allowances in respect of plant and machinery and made consequential provisions), shall be of no effect.
I do not know whether it would be convenient for the House if we were to have the discussion on initial allowances on one Amendment, namely, that which I have moved, and if that is so, I would suggest, Mr. Speaker, that you should concede the opportunity of having a Division on each of the two Amendments on the Order Paper in my name, the one I am moving now and that in page 10, line 44. If that is so, the arguments can be covered in one discussion.

Mr. Speaker: If that is for the convenience of the House I am quite willing, and I shall see that the Amendments are called separately so that Divisions can take place on both.

Mr. Butler: In that case I will launch into some of the arguments concerned with initial allowances. I should like to say at the outset that there are points concerned with agriculture which will be raised on the Amendment in page 10, line 45, in the name of my hon. and gallant Friend the Member for Richmond, Yorks (Sir T. Dugdale), and others of my hon. Friends, and I think that that issue had better be discussed separately. My hon. Friends who are associated with that Amendment will have plenty to say about the effect of the removal of the initial allowances upon the agricultural industry, a matter in which I am personally interested, but about which I shall refrain from speaking now because they will be discussing it later.
We discussed this question of initial allowances for industry for the greater part of a night in Committee and I remember that I had to move the general Amendment at 7.45 a.m. after that night, so that I would not feel particularly exalted about the idea of having to discuss it again were it not for the fact that we have some very good Amendments on the Order Paper at this stage, which in fact are so enlightened that I feel certain we shall persuade the Government to accept one of them, if not both of them.
The first Amendment has the effect of restoring the position about the initial allowances to the pre-Crippsian era. Sir Stafford Cripps doubled the allowances, and we wish to see them restored to 20 per cent. instead of 40 per cent. We consider that this device of a 20 per cent. rate will achieve what the Chancellor had in mind in moving his Budget, namely, they would at this level have the effect of curbing, to the extent desired, the home investment programme in industry, while at the same time they would retain the value of some system of initial allowances, pending a revision of the out-of-date system of depreciation allowances in general. That system of depreciation allowances under which industry today operates has taken no proper account of the change in the value of money, and we consider it a bankruptcy of statesmanship to remove the initial allowances and at the same time do nothing about altering the out-of-date system of depreciation allowances.
If the Government were to accept our proposal, they would return, perhaps for the first time for many years, to a certain stability in the economic policy of the Government and to a certain reassurance in the minds of industry. To quote the words of O.E.E.C. on our own affairs:
The action of the Government will then be less curious in their handling of the initial allowances.
No Government have ever made a more deplorable impression not only on the House but on common opinion by their handling of this question than have the present Government. The Chancellor of the Exchequer, in reply to our previous arguments on this subject, made quite a sober and sincere economic case. It was almost completely denuded of political argument, on which even at this stage I

should like to congratulate him. He said then that our arguments were not valid, but since he supported our general statement about the investment programme as a whole and its effect on industry as well as its effect on social development, it is necessary for the Economic Secretary, who is to reply, to give us some fresh arguments why he cannot meet us by introducing a more sober policy in regard to initial allowances.
It now appears from the Chancellor's last statement that industry as a whole, in regard to the need for money for replacing assets and the need for capital for future expansion, has to submit, first, to physical controls such as were described in the Chancellor's statement; secondly, to monetary control, because the Chancellor referred to particular forms of monetary devices; and thirdly, to a penal taxation of its profits.
The Chancellor referred to the monetary system of control as "a blunt instrument." As handled in the case of the initial allowances, it is a particularly blunt and rasping instrument which has upset the general stability of industry and is making industry uncertain where it can look in the future for the general money that it needs. The appeal we make to the hon. Gentleman who is to reply is that the Chancellor should substitute for this blunt instrument a rather sharper one, and should accept our first Amendment that the rate should be at 20 per cent. instead of 40 per cent.
When the initial allowances were originally introduced, and when they were doubled by Sir Stafford Cripps, that right hon. and learned Gentleman used the argument that he did so to meet the greatly increased cost of replacing fixed assets and because of the inadequacy of the ordinary depreciation allowance. When we examine the financial position of industry, we find that the reserves available for the emergencies which industry must face are no more than they were in 1930, and yet the value of money has declined to an appreciable extent. For example, taking the sample produced by the Federation of British Industries of more than 90 companies with £1,000 million of assets, the cash represented about 19 per cent. of the total assets in 1945, and represents only 9 per cent. today.
When the Chancellor made his serious reply to us on the previous occasion, he said that he did not accept our view that industry was short of capital for its needs but he has never met our argument that, with the cost of replacing assets three times what it was, with the penal taxation, with the withdrawal of this advanced loan—which is what the initial allowances were—and with the physical controls imposed upon investment, industry's position is far worse than the Government have ever realised.
What, in fact, is happening is not that we are standing here defending, as it were, a privileged section of the community, but that we are seeking to defend the reservoir from which all future employment in this country must come. What is more important, we are defending our future prosperity, our position in the export trade and our survival as an economic power. If the Chancellor thinks he is going to get out of his difficulty this year by these rather small and petty devices, let us tell him quite clearly that he will get into trouble in another year and not very far ahead, if he does not look forward and realise the very real problems of capital need which industry has to face.
Those are, I think, Mr. Speaker, sufficient arguments to justify us in moving the first Amendment on this subject. I will say one or two words about the second Amendment, so that when we come to it we will divide on it without further discussion. Whether the Chancellor accepts or refuses our first Amendment, the second Amendment is particularly useful because it says that the Clause shall not apply in respect of any expenditure under contracts placed before the day of the Budget, that is, 10th April, 1951. That concession has already been given in regard to the shipping industry.
I have here the most voluminous material, with which I could, if necessary, weary the House, from various other industries, indicating that if this concession could be given it would benefit them very much. One, for example is from the machine tool trade. If a contract were made before that date, it is doubtful, because of the length of time required to produce some of our big machine tools, whether the goods could be delivered by the date in April, 1952,

before which an order has to be completed if the initial allowance money is to be paid. I hope that the hon. Gentleman who is to reply will turn his attention to the very real need for sparing from this Clause contracts entered into prior to the Budget.
7.15 p.m.
Another very important dialectical reason exists which should make it impossible for the Government not to accept the Amendment. The Chancellor's reason for cutting out the initial allowances was that he wished to check investment by a monetary control. If a contract were entered into before the right hon. Gentleman introduced his Budget, then in any case it has made a claim upon the investment programme, and there is no point in the Chancellor's refusing the concession. Contracts entered into before that date should be free. I hope that any logic which the Economic Secretary to the Treasury learned in the South American country where he spent so much time will lead him to agree that this concession should be given. I hope that the Economic Secretary may indicate that, even at this late hour, the Government have some sense of the urgency of the capital needs of industry.

Mr. Eccles: I support the arguments so comprehensively put by my right hon. Friend. In general, it must be wrong to make these sudden and enormous changes in the law affecting the long-term planning of industry. It is not a matter where taxation ought to be radically changed in order to produce a deflationary or an inflationary policy, as the time may require. The capital programmes of the great majority of firms cannot be turned on and off like taps. It upsets the calculation of boards of directors to do this kind of thing. That is a general objection.
As my right hon. Friend has indicated, the particular reason for not wanting to withdraw the whole of these allowances should be based upon the review of the capital investment programme which the Chancellor brought before the House the other day. The Chancellor proposes a number of measures in order to guide our investments, so that we should have neither inflation nor failure in carrying out the defence programme. The argument for our Amendment is that we do not think the total abolition of the initial


allowances a wise move in achieving those two objects of keeping the economy steady and carrying out re-armament.
As to the physical controls mentioned by my right hon. Friend, I think we all agree that when there is a very large project the Government must vet it to see whether it should go forward at a time like the present. Building licences and the allocation of steel are very powerful instruments in the hands of the Government, if they wish to use them. Control over borrowing makes it very difficult for companies to get cash. They have less cash because the Income Tax and the Profits Tax have been put up. Taken together, those are the elements of a very severe deflationary policy. The question is: Where does the argument come in for adding to them the abolition of the initial allowances?
We criticise the Government's deflationary policy on two grounds. First of all, it seems to us that not enough is being done in the non-productive fields of investment. Industry and agriculture are obviously the main victims of the Government's four-fold policy to restrict investment. I believe that the local authorities could make a considerably larger contribution than they are now making and that one of the real mistakes which the Government are making in the investment field is that they do not put productive investment high enough in the priority list.
The second argument against their policy—this is where the initial allowances come in so much—is that it is bound to hit the new small and expanding firm much worse than the old-established firm. Any deflationary policy must make it harder to find money for development. The firm which has large cash reserves or a long-established credit and can go to the banks or insurance companies and get new money will be all right, but the people who get hit by this kind of policy are those who are starting out, especially in the engineering industry and especially in the large range of small firms to whom we must look as sub-contractors for the defence programme.
One of the results of taking away the initial allowances from the people whose cash resources are known to be very

small will be that the Government will have to provide special help, as they have said they would, in the way of assistance with capital for approved projects. There is a practical objection to that kind of help, which is a consequence of not allowing these people to get the interest-free loan through the initial allowances, and that is that it takes a long time to go to Whitehall and justify the need for an interest-free loan or a loan under special terms, which so many of these small businesses will want.
I do not know what criterion will be employed for giving back to those firms who need capital to expand in the next few years money which has been, as it were, taken away from them by the abolition of the initial allowances. I fear that, in order not to have too many inquiries for fresh capital, the Government will limit their assistance to defence projects, and yet there are very many other projects connected with the export trade and with putting ourselves on a level of efficiency with foreign countries which ought to be looked at.
I am sure that my hon. Friends would agree that we do not want to have the State coming in as a provider of capital because a foolish measure of taxation has deprived a whole range of companies of the resources that they would otherwise have had. It is a very clumsy way of doing what would be better done by the small companies so far as they can do it out of their own resources. My hon. Friends have already made one effort to remedy this in moving to reduce the rate of Profits Tax on undistributed profits to half its present level. That was done to provide firms with larger cash resources than they have under the present penal rates of taxation. We were defeated and the House would not accept it. We now fall back on this Amendment, which will help firms which have capital schemes in hand.
The conviction behind the Amendment—at least it certainly is mine—is that the Government are not giving production its true place in the investment programme. I never like to take a lesson from the Soviets, but I well remember how they treated their blitzed cities when they liberated them from the Germans. They decreed that the only investment to be done in Stalingrad and such cities was to rebuild the factories. They said,


"Work first, and afterwards we will turn to the social amenities and other forms of investment." We have gone too far the other way. The Soviet method was brutal and we should not have wanted to copy it, but we have gone too far the other way.
Our whole standard of life depends so much on encouraging investment that the Government ought to look at the Amendment again. The fact is that Ministers are finding that they cannot have their cake and eat it. They cannot have the high level of non-productive expenditure and also have investment on productive assets anything like big enough for the needs of the country, and therefore they are cutting investment. That is a bad choice. We ought to make a greater effort to let the smaller firms in particular carry out their renewals.

Mr. Jenkins: The hon. Member is putting forward a very interesting case. I hope that before he sits down he will try to deal with a point which puzzles some of us on this side of the House. I do not think that any of his hon. Friends dealt with it in Committee. Why does he advocate the initial allowance, which he rightly says is an interest-free loan, while at the same time he and so many of his hon. Friends advocate a tighter credit policy and probably dearer money, which would have exactly the reverse effect of the proposal he is now putting forward?

Mr. Eccles: I am grateful to the hon. Member for giving me the opportunity to make that explanation. The tighter credit policy affects every borrower over the whole range—local authorities, Government Departments, anybody who has to borrow money. If the interest rate goes up or if there is a general instruction that banks and other institutions shall lend on stiffer terms, whatever the terms may be, every borrower is pinched. I object to the singling out of the initial allowance—it is only a substitute over a narrower sector for using the interest rate—because I object to the singling out of production. The hon. Member will see that we could by a general monetary policy squeeze out people whose claims to new savings today are nothing like as high as those of firms which want to improve productive assets. That is the main reason I support the Amendment.

Mr. Nabarro: Important financial considerations would result from a complete abrogation or withdrawal of industrial initial allowances for Income Tax purposes. Firstly, the increase in the rate of Profits Tax and Income Tax, as a result of the proposals in the Finance Bill, will have the overall average effect upon industrial concerns of every description of mulcting them of an aggregate of approximately 65 per cent. of their gross profits, leaving only 35 per cent. to be employed for the development of their businesses and for productive and working capital. That 35 per cent. is a narrower and a smaller margin than we have ever had in this country and it is at a time when the cost of plant, machinery and equipment and raw materials is indubitably higher than it has ever been before.
Secondly, as a result of the new instructions given by the Chancellor to the Capital Issues Committee there has been a general tightening up of the terms and conditions which become necessary before a sanction can be issued for the provision of new capital for industry. That has taken place only in the last few months. When added to the incidence of the increased rates of industrial taxation, this must have had a restrictive effect on available finances for industrial undertakings seeking to enlarge and expand their production. Thirdly, of course, the withdrawal of these initial allowances must create an immediate financial hardship for many firms who have already contracted for, or have undertaken to provide, new plant to match increased production demands that are being made upon them.
7.30 p.m.
Fourthly, the joint stock banks have, in the course of the last 18 months, been pursuing a course of increased prudence in the day to day advances which they are prepared to give to their customers. Many people have expressed the view to me, since the Committee stage of this Bill, that the loss of the initial allowances could be made good by industrial concerns going along to their bankers and arranging short-term loans. I say to that school of thought that it is no part of the purpose of joint stock banks to provide permanent capital for industry or the financial sinews for increasing or making more efficient industrial plant. That purpose, in my view, would be wholly wrong.
Fifthly, the cost of raw materials deserves a word at this stage. If 65 per cent. of the gross earnings of a business are to be taken by direct taxation there is only a small margin left for working capital, and the inordinately high cost of raw materials today makes financial stringency absolutely inevitable. Perhaps the Economic Secretary would listen to this extreme case. A high percentage of the carpet manufacturing industry of Britain is centred in Kidderminster. The carpet industry can make the claim today, that no less than 80 per cent. of the cost of the finished product is made up of raw materials. That, I say without fear of contradiction, is the highest percentage of raw materials for the finished product of any industry in Britain.
The fact that today cotton is three and a half times the 1947 price, that wool is five to six times the 1947 price, that jute is nearly three times the 1947 price, means that with this added burden of taxation, and yet the withdrawal of initial allowances, every carpet manufacturing business is facing the most extreme financial stringency. What were financial reserves a matter of 18 months or two years ago, have now been converted on the respective balance sheets of the companies concerned, to heavy overdrafts or to a financial situation which can best be described by saying that it is "badly in the red."
My right hon. Friend the Member for Saffron Walden (Mr. R. A. Butler) made a passing reference to the machine tool industry. I might add a word to that because for many years before entering this House I was directly concerned with that industry. I know that my right hon. Friend was not exaggerating the position when he referred to the time lag that exists between the placing of an order today for a machine tool and the date of delivery of that tool. May I give some examples.
The delivery of an ordinary capstan lathe today, essential for the defence programme, vital for a big range of engineering processes, takes approximately three to four years. A wood-working machine tool, such as a four-cutter or a six-cutter or a planing machine, often takes three to four years. In the carpet industry a loom requires a minimum of three years before it is received from the manufacturers. In

the case of textile machinery from Britain, that is in world wide demand and there is only a limited flow to the home market—delivery periods are known to run even to five or six years. Therefore, the period of notice before the withdrawal of these initial allowances given by the Chancellor—that period of grace being only eight months from 10th April last until 1st January next—is wholly insufficient.
I believe that there is a strong case, in the interests of the vital requirements of industry, that a concession should be given here, and that machine tools and similar machinery on order on 10th April, 1951, should be allowed to rank for industrial initial allowances for Income Tax purposes, irrespective of the date upon which that machinery happens to fall due for delivery, be it 1952, 1953 or 1954.
May I, in further emphasising a point made by my right hon. Friend, draw the attention of the Economic Secretary once again to the relatively calamitous position in which our British machine tool industry and our machine shops may find themselves in in the course of the next two or three years if he continues to neglect the production aspects of this problem. The Chancellor of the Exchequer made a two-hour speech when he presented his Budget and did not mention production once. From beginning to end he did not mention production at all.
Surely, all hon. Members on either side of the House who make speeches in the country about sustaining or maintaining the standards of living that we have enjoyed, or otherwise, in the last year or two, must recognise that if we are to prevent a fall in that standard it is vital that we superimpose the defence programme on our existing export programme and yet sustain the supply of consumer goods to the home market. That can be done only by increased production.
Will the Economic Secretary recall that the average age of a machine tool in Britain is 22 years? Yet the average age of a machine tool in America is nine years. The reason for the disparity is that the United States of America has pursued, over the last quarter of a century, a realistic and objective fiscal policy to produce the maximum and the highest possible rate of replacement of industrial equipment. We in Britain have


been content to allow depreciation allowances and obsolescence combined, over a period of 14 years or more.
When considering these Amendments some concern must be felt in regard to our overall balance of overseas payments during the first six months of this year. At the present time we are running a deficit at the rate of £800 million a year in our overseas payments—as bad as, if not worse than, 1947–100 per cent. worse than last year. Yet the Chancellor insists upon this withdrawal of initial allowances which must strike a death blow to the increasing of rates of productivity of every industrial undertaking which is seeking to modernise or improve its plant and enhance its rate of productivity.
I made a lengthy speech during the Committee stage, and I do not want to repeat any part of it. Then I endeavoured to persuade the Chancellor to withhold from his decision to withdraw initial allowances on all new fuel saving equipment installed in industry with a special eye to the conservation of coal. In the peroration of that speech I said that I was perhaps guilty of a great deal of pessimism in stating that for the first four months of this year—up to 30th April, 1951—although our coal mining production in Britain had increased by 2,300,000 tons compared with the year 1950, our consumption had increased by 2,600,000 tons compared with the previous year.
Two more months have gone by, and that position has become immeasurably worse. So much so that the Minister of Fuel and Power wrote a letter—which was referred to in the national Press this morning—to Lord Hyndley, Chairman of the N.C.B., and to Mr. Horner, General Secretary of the National Union of Mineworkers, saying that unless production improves immediately there will be another winter coal crisis. What is the Chancellor of the Exchequer doing to provide industrialists with the fiscal incentives necessary to install more efficient coal burning equipment? The Chancellor is doing exactly the opposite of what he should do. He is withdrawing the only incentive that existed to those industrialists to install the equipment that would economise in fuel burning in industry.
If the Chancellor will agree to accept these Amendments—which leave untouched 20 per cent. of the initial allowances for Income Tax purposes—he will at least provide a modest incentive to install in industry improved coal and oil fuel burning equipment. Thus he would make a contribution towards averting a crisis which, if it falls upon us next winter in the midst of the defence programme and with this increasing adverse balance of trade, can only be calamitous to the whole of the financial and economic considerations that we have been studying during the Committee stage of this Bill and now also during the Report stage. I plead, therefore, with the Economic Secretary not to brush aside the powerful arguments that have been given from this side of the House for retaining a modicum of the initial allowances but to give the matter a little more than cursory consideration.

The Economic Secretary to the Treasury (Mr. John Edwards): I say to the hon. Member for Kidderminster (Mr. Nabarro) that it is never my habit to brush aside an argument. On a matter of this kind, which is, I think it is appreciated, of very great importance, we have calmly and objectively to consider the facts and then to decide in the light of our consideration of the facts what it is best for us to do. As I understand it, this matter does not really raise any party political point. It is a matter of studying our economic circumstances and then saying, "What are the methods open to us?"
Considering the large number of words that have already been spoken on this matter since the Budget was introduced, the right hon. Member for Saffron Walden (Mr. R. A. Butler) and his hon. Friends have had a surprising freshness in the way in which they deployed their old arguments. I cannot, however, agree that any new arguments were advanced, and I must admit that I am in exactly the same position as were the right hon. Member and his hon. Friends.
It did, however, interest me that the right hon. Gentleman made one change in his presentation compared with the speech he made in the Committee stage on the Motion that the Clause stand part. Then, when I listened to his speech and as I have read it afterwards, I could find no recognition that there was a problem of curbing investment at all, although his


hon. Friend the Member for Chippenham (Mr. Eccles) was very careful to narrow the difference between himself and the Chancellor by agreeing without any equivocation that there was a need to curb investment.
The right hon. Gentleman seemed to suggest that we ought to have stability in economic policy, for the sake of stability. I should have thought that he would have argued that economic policy must be adapted to our changing circumstances. Certainly it by no means follows that the economic policy that was appropriate even a year ago is appropriate in a post-Korean situation and in a situation where we have embarked upon an enormous defence programme.
Therefore, repeating arguments that have been advanced already, and disagreeing absolutely with the hon. Member for Kidderminster, I say that we really must accept the position that we cannot do everything at once; that even given the highest productivity of which the engineering and related industries are capable, we cannot expect them to do everything they were doing before and to meet the needs of the defence programme in addition.
When my right hon. Friend made his statement on the capital investment programme, he put the thing in words which, I think it may be as well to repeat. He said:
In consequence, there will in 1951 be no increase in the supplies of plant and machinery available for home industry, while in 1952 and 1953 there must be a substantial reduction, since more and more of the engineering industry will be producing armaments instead. Moreover, of the plant and machinery available for the home market, a much larger share must from now on go to firms engaged on defence production, so that even in 1951 there will be some fall in supplies for purely civil purposes."—[OFFICIAL REPORT, 21st June, 1951; Vol. 489, c. 718.]
I believe that that is incontestable. I cannot believe that anyone who studies the economic facts can come to any other conclusion. If the hon. Member for Chippenham would go back to the Chancellor's statement, he would see that the programmes in the public sector are not exempted from cuts any more than the programmes in the private sector of industry.
7.45 p.m.
Of course, it is true, as I grant to the hon. Member for Kidderminster, that if

we do not have as much new capital equipment in our industries, we shall not have as high an increase in the productivity as we should were we not confronted with the defence and export programmes. But I cannot accept the view of the right hon. Gentleman that the suspension of initial allowances makes an enormous difference. The statement by the hon. Member for Kidderminster, when he said that this would be the death blow to industry, seemed to me to be an exaggeration of the wildest kind After all, these initial allowances—

Mr. Nabarro: I am sure that the hon. Gentleman would not wish to misquote me. I did not say that it would be the death blow to British industry. I said that it would be the death blow to the rate of expansion of productivity that all of us support if the needs of the defence programme and the export programme, and the sustaining of the standard of living for the home supplies, are to be maintained.

Mr. Edwards: I made a very careful note at the time of what the hon. Member said. Doutbless, when we see HANSARD, we can reconcile the difference. In any event, even to take the mild terms of the right hon. Member for Saffron Walden, I do not think it makes an enormous difference. I agree wholly with what has been said about the importance of corporate saving and about the need for new industrial capital development, but I have never regarded initial allowances as having an effect over the whole of industry. If these initial allowances were a help, they were a limited help to industry; and the suspension of them of course will be a hindrance, but, again, a limited hindrance. The Amendment would leave an inducement—a smaller inducement, but an inducement nevertheless.
Our proposal is to suspend initial allowances because we feel that that is the best and simplest way of curbing investment. I do not suggest that the effect here is enormous or large. As I see it, what will happen will be something like this: firms will reconsider the marginal cases—no more. They may decide not to do what they would have done, or, more likely, not to do as much as they would have done. It is always, as, I think, will be appreciated by anyone of business experience—a matter in busi-


ness of the little more or the little less; and success or failure in business depends upon an infinite number of decisions on marginal considerations.

Mr. Eccles: The Economic Secretary says that it has only a small effect, but he will recollect that in a full year, the Chancellor says, the withdrawal of the allowances will be equivalent to £170 million. Does the hon. Gentleman really think that £170 million is a small sum out of the profits of business after taxation? I should be interested to know his view about £170 million in connection with raising the money from other sources.

Mr. Edwards: As the hon. Member appreciates, if one talks about the figure of £170 million, that by no means is to be regarded as the measure of what happens in industry as a result of the suspension of initial allowances. The business man, the directors and the board, will sit down and consider in the light of this position, "What are we going to do?" I would not for a moment suppose that we shall have a proportionate reduction of the same order as the actual interest-free loans, if we can call them such, covered by the present initial allowances. It does not seem to me that it would be good enough for our purpose to have the lower initial allowance when we really want to damp off the demand in this field, and, whether we do it in one way or another, I think it ought to be done.
It has been suggested that if we did not do that at least we should apply the suspension so as to maintain the initial allowances in respect of expenditure under contracts placed before Budget Day. We spent a very long time on Committee stage arguing particular cases some of which clearly cover purposes like that of fuel economy, which have the general backing of the whole House. I then advanced reasons why we ought to reject the claim and, during the long night of the 7th to 8th of June—

Mr. Pickthorn: It was not unusually long.

Mr. Edwards: I was on the bench for nine hours and it seemed long. During that time I rejected claims for all kinds of good causes, save only the claim in the case of shipbuilding, which seemed to me to have unique features. One of the arguments I then used was that if I admitted the claims then put forward I

would not know how to reject the claims in general. How right I was is now shown because the official Opposition have now got away from the idea of tabling claims for particular classes and have come right down on behalf of a claim for all contracts made before Budget Day.

Mr. R. A. Butler: May I correct the hon. Gentleman? My Amendment was on the Order Paper for the Committee Stage and was not called, so we have not altered our point of view at all.

Mr. Edwards: At any rate the right hon. Gentleman has received a certain justification for that point of view in the arguments I deployed on those occasions. It has been said that because a contract was entered before Budget Day it ought to be covered by the initial allowance. I do not think we need take it absolutely for granted that all contracts entered into before Budget Day will be implemented. In some cases we shall find that arrangements will be made for them not to be carried out, and to some extent I should think that a desirable thing.
Additional to the general argument I have deployed, there is a particular argument which ought to be borne in mind in this connection. We would have the most serious practical difficulties were we to accept the second Amendment put forward by the right hon. Gentleman. The determination of the date of the orders which may at first be provisional would be an extremely troublesome matter. The question would be bound to arise in a large number of cases whether in varying circumstances there was evidence establishing that at the Budget date there was a contract which could be legally enforced as between the parties. To take only one example, the case of passenger motor vehicles. I do not know how many orders there are on the books, but there must be thousands. Is it really suggested that if the order is not delivered for several years ahead we have to set up enormous administrative apparatus to deal with such cases? That would be really quite impossible.
Although this instrument may be a blunt instrument it would be a good deal blunter if either of these Amendments were adopted. We think this instrument, blunt though it may be—the method Of total suspension of initial allowance—is the best way and the simplest way of


helping to do what needs to be done. Whether it will prove entirely adequate or not only time can show but, for our part, we hope that, buttressed and supported by the new allocation schemes, this will be what is wanted. We sincerely hope that, for the alternative, limitation of supplies orders and all that kind of thing is some-

thing we should avoid if at all possible. I hope the House will agree that both these Amendments should be rejected.

Question put, "That the words proposed to be left out stand part of the Bill."

The House divided: Ayes, 280: Noes, 264.

Division No. 161]
AYES
7.56 p.m.


Acland, Sir Richard
Edelman, M
Keenan, W


Adams, Richard
Edwards, John (Brighouse)
Kenyon, C.


Albu, A. H.
Edwards, Rt. Hon. Ness (Caerphilly)
Key, Rt. Hon. C W


Allen, Arthur (Bosworth)
Edwards, W. J. (Stepney)
King, Dr. H. M


Allen, Scholefield (Crewe)
Evans, Albert (Islington, S. W)
Kinghorn, Sqn Ldr E


Anderson, Alexander (Motherwell)
Evans, Edward (Lowestoft)
Kinley, J


Anderson, Frank (Whitehaven)
Evans, Stanley (Wednesbury)
Lang, Gordon


Attlee, Rt. Hon C R
Ewart, R.
Lee, Frederick (Newton)


Awbery, S. S.
Fernyhough, E
Lee, Miss Jennie (Cannock)


Ayles, W. H
Field, Capt. W J
Lever, Harold (Cheetham)


Bacon, Miss Alice
Fletcher, Eric (Islington, E.)
Lever, Leslie (Ardwick)


Baird, J
Follick, M.
Lewis, Arthur (West Ham, N)


Balfour, A.
Foot, M. M
Lewis, John (Bolton, W.)


Barnes, Rt. Hon. A. J
Forman, J. C
Lindgren, G. S.


Bartley, P
Fraser, Thomas (Hamilton)
Lipton, Lt.-Col. M


Bellenger, Rt. Hon. F. J.
Freeman, John (Watford)
Logan, D. G.


Benn, Wedgwood
Freeman, Peter (Newport)
Longden, Fred (Small Heath)


Benson, G.
Gaitskell, Rt. Hon. H. T. N.
McAllister, G.


Beswick, F.
Ganley, Mrs. C. S
MacColl, J. E.


Bing, G. H. C.
Gibson, C. W.
McGhee, H. G.


Blenkinsop, A.
Gilzean, A.
McGovern, J.


Blyton, W. R.
Glanville, James (Consett)
McInnes, J.


Boardman, H
Gooch. E. G.
Mack, J. D.


Booth, A.
Greenwood, Anthony (Rossendale)
McKay, John (Wallsend)


Bottomley, A. G.
Greenwood, Rt. Hon. Arthur (Wakefield)
Mackay, R. W. G. (Reading, N.)


Bowles, F. G. (Nuneaton)
Grenfell, Rt. Hon D. R
McLeavy, F.


Braddock, Mrs. Elizabeth
Grey, C. F.
MacMillan, Malcolm (Western Isles)


Brook, Dryden (Halifax)
Griffiths, David (Rother Valley)
McNeil, Rt. Hon. H.


Brooks, T. J. (Normanton)
Griffiths, Rt. Hon. James (Llanelly)
MacPherson, Malcolm (Stirling)


Braughton, Dr. A. D. D
Griffiths, W. (Manchester Exchange)
Mainwaring. W. H.


Brown, Thomas (Ince)
Gunter, R. J.
Mallalieu, E. L (Brigg)


Burke, W. A.
Haire, John E. (Wycombe)
Mallalieu, J P W (Huddersfield E)


Burton, Miss E.
Hale, Joseph (Rochdale)
Mann, Mrs. Jean


Butler, Herbert (Hackney. S.)
Hale, Leslie (Oldham, W.)
Marquand, Rt. Hon H A


Callaghan, L. J.
Hall, Rt. Hon. Glenvil (Colne Valley)
Mathers, Rt. Hon G


Carmichael, J.
Hall, John (Gateshead, W.)
Mayhew, C P


Castle, Mrs. B. A
Hamilton. W. W
Mellish, R. J


Champion, A. J
Hannan, W.
Messer, F


Chetwynd, G. R
Hardy, E A
Middleton, Mrs L.


Clunie, J.
Hargreaves, A
Mikardo, Ian


Cocks, F S.
Hastings, S.
Mitchison, G R


Coldrick, W.
Hayman, F. H.
Moeran, E. W


Collick, P.
Henderson, Rt. Hon. A (Rowley Regis)
Monslow, W


Cook, T. F.
Hewitson, Capt M
Moody, A S


Cooper, Geoffrey (Middlesbrough, W.)
Hobson, C R
Morgan, Dr H B


Cooper, John (Deptford)
Holman, P.
Morley, R.


Corbet, Mrs. Freda (Peckham)
Holmes, Horace (Hemsworth)
Morris, Percy (Swansea. W)


Cove, W. G.
Houghton, D
Mort, D L


Craddock, George (Bradford, S.)
Hoy, J
Moyle, A


Crawley, A.
Hubbard, T.
Mulley, F W


Crosland, C A R
Hudson, James (Ealing, N)
Nally, W.


Crossman, R. H S
Hughes, Emrys (S Ayrshire)
Neal, Harold (Bolsover)


Cullen, Mrs. A.
Hughes, Hector (Aberdeen. N.)
Oldfield, W. H.


Daines, P.
Hynd, H. (Accrington)
Oliver, G. H


Dalton, Rt. Hon H.
Hynd, J. B. (Attercliffe)
Orbach, M.


Darling, George (Hillsborough)
Irvine, A. J. (Edge Hill)
Padley, W E


Davies, A. Edward (Stoke, N)
Irving, W. J. (Wood Green)
Paget, R. T


Davies, Ernest (Enfield, E.)
Isaacs, Rt. Hon. G. A
Paling, Rt. Hon W (Dearne Valley)


Davies, Harold (Leek)
Janner, B.
Pannell, T. C


Davies, Stephen (Merthyr)
Jay, D. P. T.
Pargiter, G A


de Freitas, Geoffrey
Jeger, George (Goole)
Parker, J


Deer, G.
Jeger, Dr. Santo (St. Pancras, S.)
Paton, J


Delargy, H. J.
Jenkins, R. H.
Pearson, A


Diamond, J.
Johnson, James (Rugby)
Peart, T. F


Dodds, N. N.
Johnston, Douglas (Paisley)
Popplewell, E


Donnelly, D.
Jones, David (Hartlepool)
Porter, G


Dugdale, Rt. Hon. John (W. Bromwich)
Jones, Frederick Elwyn (West Ham, S.)
Price, Joseph T (Westhoughton)


Dye, S.
Jones, Jack (Rotherham)
Proctor, W. T


Ede, Rt. Hon. J. C.
Jones, William Elwyn (Conway)
Pryde, D. J.




Pursey, Cmdr. H
Strachey, Rt. Hon. J.
West, D. G.


Rankin, J.
Strauss, Rt. Hon. George (Vauxhall)
Wheatley, Rt. Hn. John (Edinb'gh E.)


Rees, Mrs. D.
Stross, Dr. Barnett
White, Mrs. Eirene (E. Flint)


Reeves, J.
Summerskill, Rt. Hon. Edith
White, Henry (Derbyshire, N.E.)


Raid, Thomas (Swindon)
Sylvester, G. O
Whiteley, Rt. Hon. W.


Reid, William (Camlachie)
Taylor, Bernard (Mansfield)
Wigg, G.


Richards, R.
Taylor, Robert (Morpeth)
Wilcock, Group Capt. C. A. B


Roberts, Rt. Hon. A.
Thomas, David (Aberdare)
Wilkins, W. A.


Roberts, Goronwy (Caernarvonshire)
Thomas, George (Cardiff)
Willey, Frederick (Sunderland)


Robertson, J. J. (Berwick)
Thomas, lorwerth (Rhondda, W.)
Willey, Octavius (Cleveland)


Rogers, George (Kensington, N.)
Thomas, Ivor Owen (Wrekin)
Williams, David (Neath)


Royle, C.
Thorneycroft, Harry (Clayton)
Williams, Rev. Llywelyn (Abertillery)


Shinwell, Rt. Hon. E.
Thurtle, Ernest
Williams, Ronald (Wigan)


Shurmer, P. L. E.
Timmons, J.
Williams, Rt. Hon. Thomas (Don V'lly)


Silverman, Julius (Erdington)
Tomney, F.
Williams, W. T. (Hammersmith, S.)


Silverman, Sydney (Nelson)
Turner-Samuels, M.
Wilson, Rt. Hon. Harold (Huyton)


Simmons, C. J.
Ungoed-Thomas, Sir Lynn
Winterbottom, Ian (Nottingham, C.)


Slater, J.
Usborne, H.
Winterbottom, Richard (Brightside)


Smith, Ellis (Stoke, S)
Vernon, W. F
Wyatt, W. L.


Smith, Norman (Nottingham, S.)
Viant, S. P.
Yates, V. F.


Snow, J. W.
Wallace, H. W.
Younger, Rt. Hon K


Sorensen, R. W.
Watkins, T. E.



Soskice, Rt. Hon. Sir Frank
Webb, Rt. Hon. M. (Bradford, C.)
TELLERS FOR THE AYES:


Sparks, J. A.
Weitzman, D.
Mr. Bowden and


Steele, T.
Wells, Percy (Faversham)
Mr. Kenneth Robinson.


Stewart, Michael (Fulham, E.)
Wells, William (Walsall)





NOES


Aitken, W. T.
de Chair, Somerset
Hudson, Sir Austin (Lewisham, N.)


Alport, C. J. M.
De la Bère, R.
Hudson, Rt. Hon. Robert (Southport)


Amery, Julian (Preston, N.)
Deedes, W. F.
Hudson, W. R. A. (Hull, N.)


Amory, Heathcoat (Tiverton)
Digby, S. Wingfield
Hurd, A. R.


Arbuthnot, John
Dodds-Parker, A. D.
Hutchinson, Geoffrey (Ilford, N.)


Ashton, H. (Chelmsford)
Donner, P. W.
Hutchison, Lt.-Com. Clark (E'b'rgh W.)


Assheton, Rt. Hon. R. (Blackburn, W)
Douglas-Hamilton, Lord Malcolm
Hutchison, Col. James (Glasgow)


Astor, Hon. M. L.
Drayson, G. B.
Hyde, Lt.-Col. H. M.


Baker, P. A. D.
Drewe, C.
Hylton-Foster, H. B.


Baldock, Lt.-Cmdr J. M
Dugdale, Maj. Sir Thomas (Richmond)
Jennings, R.


Banks, Col. C.
Duncan, Capt. J. A L
Johnson, Howard (Kemptown)


Beamish, Maj. Tufton
Dunglass, Lord
Jones, A. (Hall Green)


Bell, R. M.
Duthie, W. S.
Joynson-Hicks, Hon. L. W


Bennett, Dr. Reginald (Gosport)
Eccles, D. M.
Kaberry, D.


Bennett, William (Woodside)
Elliot, Rt. Hon. W E
Kerr, H. W. (Cambridge)


Bavins, J. R. (Liverpool, Toxteth)
Erroll, F. J.
Kingsmill, Lt.-Col. W H


Birch, Nigel
Fisher, Nigel
Lambert, Hon. G.


Bishop, F. P.
Fort, R.
Lancaster, Col. C. G


Black, C. W.
Foster, John
Langford-Holt, J.


Boles, Lt.-Col. D. C. (Wells)
Fraser, Hon. Hugh (Stone)
Law, Rt. Hon. R. K.


Bossom, A. C.
Fraser, Sir I. (Morecambe &amp; Lonsdale)
Leather, E. H. C.


Boyd-Carpenter, J. A
Fyfe, Rt. Hon. Sir David Maxwell
Legge-Bourke, Maj. E. A. H


Boyle, Sir Edward
Galbraith, Cmdr. T. D. (Pollok)
Lennox-Boyd, A. T.


Bracken, Rt. Hon. B
Galbraith, T. G. D. (Hillhead)
Lindsay, Martin


Braine, B. R.
Gammons, L. D.
Linstead, M. N.


Braithwaite, Sir Albert (Harrow, W.)
Garner-Evans, E. H. (Denbigh)
Llewellyn, D.


Braithwaite, Lt.-Cr. G. (Bristol, N.W.)
Gates, Maj. E. E.
Lloyd, Rt. Hn. G. (King's Norton)


Bromley-Davenport, Lt.-Col. W.
George, Lady Megan Lloyd
Lloyd, Maj. Guy (Renfrew, E.)


Brooke, Henry (Hampstead)
Glyn, Sir Ralph
Lloyd, Selwyn (Wirral)


Browne, Jack (Govan)
Gomme-Duncan, Col. A.
Lockwood, Lt.-Col. J. C.


Buchan-Hepburn, P. G T
Gridley, Sir Arnold
Longden, Gilbert (Herts, S.W.)


Bullock, Capt. M.
Grimston, Hon. John (St. Albans)
Low, A. R. W.


Bullus, Wing Commander E. E
Grimston, Robert (Westbury)
Lucas, Sir Jocelyn (Portsmouth, S.)


Burden, F. A.
Harden, J. R. E.
Lucas, P. B. (Brentford)


Butcher, H. W.
Hare, Hon. J. H. (Woodbridge)
Lucas-Tooth, Sir Hugh


Butler, Rt. Hn. R. A. (Saffron Walden)
Harris, Frederic (Croydon, N.)
McAdden, S. J.


Carr, Robert (Mitcham)
Harris, Reader (Heston)
McCorquodale, Rt. Hon. M. S.


Carson, Hon. E.
Harvey, Air Codre. A. V. (Macclesfield)
Macdonald, Sir Peter (I. of Wight)


Channon, H.
Harvey, Ian (Harrow, E.)
Mackeson, Brig. H. R.


Clarke, Col. Ralph (East Grinstead)
Harvie-Watt, Sir George
McKie, J. H. (Galloway)


Clarke, Brig. Terence (Portsmouth, W.)
Hay, John
Maclay, Hon. John


Colegate, A.
Head, Brig. A. H
Maclean, Fitzroy


Cooper, Sqn. Ldr. Albert (Ilford, S.)
Heald, Llonel
MacLeod, lain (Enfield, W.)


Cooper-Key, E. M.
Henderson, John (Cathcart)
MacLeod, John (Ross and Cromarty)


Corbett, Lt.-Col. Uvedale (Ludlow)
Hicks-Beach, Maj. W W
Macpherson, Major Niall (Dumfries)


Craddock, Beresford (Spelthorne)
Higgs, J. M. C.
Maitland, Cmdr. J. W.


Cranborne, Viscount
Hill, Mrs. E. (Wythenshawe)
Manningham-Butler, R. E


Crookshank, Capt Rt. Hon H F C
Hinchingbrooke, Viscount
Marlowe, A. A. H.


Crouch, R. F.
Hirst, Geoffrey
Marples, A. E.


Crowder, Capt. John (Finchley)
Holmes, Sir Stanley (Harwich)
Marshall, Douglas (Bodmin)


Crowder, Petre (Ruislip—Horthwood)
Hope, Lord John
Marshall, Sidney (Sutton)


Cundiff, F. W.
Hopkinson, Henry
Maude, Angus (Ealing, S.)


Cuthbert, W. N.
Hornsby-Smith, Miss P.
Maude, John (Exeter)


Darling, Sir William (Edinburgh, S.)
Horsbrugh, Rt. Hon. Florence
Maudling, R.


Davidson, Viscountess
Howard, Gerald (Cambridgeshire)
Medlicott, Brig. F.


Davies, Nigel (Epping)
Howard, Greville (St. Ives)
Mellor, Sir John







Molson, A. H. E.
Roberts. Maj. Peter (Heeley)
Taylor, Charles (Eastbourne)


Monckton, Sir Waller
Robinson, Roland (Blackpool, S.)
Taylor, William (Bradford, N.)


Morrison, John (Salisbury)
Robson-Brown, W.
Teeling, W.


Morrison, Rt. Hon. W. S (Cirencester)
Rodgers, John (Sevenoaks)
Thomas, J. P. L. (Hereford)


Mott-Radclyffe, C. E
Roper, Sir Harold
Thompson, Kenneth Pugh (Walton)


Nabarro, G.
Ropner, Col. L.
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Nicholls, Harmar
Russell, R. S.
Thorneycroft, Peter (Monmouth)


Nicholson, G.
Ryder, Capt. R. E. D.
Thorp, Brig. R. A. F.


Noble, Cmdr. A. H. P
Salter, Rt. Hon. Sir Arthur
Tilney, John


Nugent. G. R. H.
Sandys, Rt. Hon. D.
Touche, G. C.


Nutting, Anthony
Savory, Prof. D. L.
Turner, H. F. L


Oakshott, H. D.
Scott, Donald
Turton, R. H.


Odey, G. W.
Shepherd, William
Vane, W. M. F.


O'Neill, Rt. Hon. Sir Hugh
Smiles, Lt.-Col. Sir Walter
Vosper, D. F.


Ormsby-Gore, Hon. W. O.
Smithers, Peter (Winchester)
Wade, D. W.


Orr, Capt. L P. S.
Smithers, Sir Waldron (Orpington)
Wakefield, Edward (Derbyshire, W.)


Orr-Ewing, Charles Ian (Hendon, N,)
Smyth, Brig. J. G. (Norwood)
Wakefield, Sir Wavell (Marylebone)


Orr-Ewing, Ian L. (Weston-super-Mare)
Snadden, W. McN.
Walker-Smith, D. C


Osborne, C.
Soames, Capt. C.
Ward, Hon. George (Worcester)


Perkins, W. R. D.
Spearman, A. C. M.



Pelo, Brig. C. H. M
Spence, H. R. (Aberdeenshire, W.)
Ward, Miss I. (Tynemouth)


Pickthorn, K.
Spent, Sir Patrick (Kensington, S.)
Waterhouse, Capt Rt. Hon. C


Pitman, I. J.
Stanley, Capt. Hon. Richard (N. Fylde)
Watkinson, H.


Powell, J. Enoch
Stevens, G. P.
White, Baker (Canterbury)


Price, Henry (Lewisham, W.)
Steward, W. A. (Woolwich, W.)
Williams, Charles (Torquay)


Prior-Palmer, Brig. O
Stewart, Henderson (Fife, E)
Williams, Gerald (Tonbridge)


Profumo, J. D.
Stoddart-Scott, Col. M.
Williams, Sir Herbert (Croydon, E.)


Raikes, H. V.
Storey, S.
Wills, G.


Rayner, Brig. R.
Strauss, Henry (Norwich, S.)
Wilson, Geoffrey (Truro)


Redmayne, M.
Stuart, Rt. Hon. James (Moray)
Winterton, Rt. Hon, Earl


Remnant, Hon. P
Studholme, H. G.
Wood, Hon. R


Ronton, D. L M.
Summers, G S



Roberts, Emrys (Merioneth)
Sutcliffe, H.
TELLERS FOR THE NOES:




Major Conant and Major Wheatley.

Amendment Proposed: In page 10, line 44, at end, insert:

Provided that this section shall not apply in respect of any expenditure under contracts placed before the tenth day of April, nineteen hundred and fifty-one.—[Mr. R. A. Butler.]

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 265; Noes, 280.

Division No. 162.]
AYES
[8.6 p.m.


Aitken, W. T.
Clarke, Brig. Terence (Portsmouth, W.)
Galbraith, T. G. D. (Hillhead)


Alport, C. J. M.
Colegate, A.
Gammans, L. D.


Amery, Julian (Preston, N.)
Conant, Maj. R. J. E.
Garner-Evans, E. H. (Denbigh)


Amory, Heathcoat (Tiverton)
Cooper, Sqn. Ldr. Albert (Ilford, S.)
Gates, Maj. E. E.


Arbuthnot, John
Cooper-Key, E. M.
George, Lady Megan Lloyd


Ashton, H. (Chelmsford)
Corbett, Lt.-Col. Uvedale (Ludlow)
Glyn, Sir Ralph


Assheton, Rt. Hon. R. (Blackburn, W.)
Craddock, Beresford (Spelthorne)
Gomme-Duncan, Col. A


Astor, Hon. M. L.
Cranborne, Viscount
Gridley, Sir Arnold


Baker, P. A. D.
Crookshank, Capt. Rt. Hon H F. C.
Grimston, Hon. John (St. Albans)


Baldock, Lt.-Cmdr. J. M
Crouch, R. F.
Grimston, Robert (Westbury)


Banks, Col. C.
Crowder, Capt. John (Finchley)
Harden, J. R. E.


Beamish, Maj. Tufton
Crowder, Petre (Rulslip—Northwood)
Hare, Hon. J. H. (Woodbridge)


Bell, R. M.
Cundiff, F. W.
Harris, Frederic (Croydon, N.)


Bennett, Dr. Reginald (Gosport)
Cuthbert, W N.
Harris, Reader (Heston)


Bennett, William (Woodside)
Darling, Sir William (Edinburgh, S.)
Harvey, Air Codre. A. V. (Macclesfield)


Bevins, J. R. (Liverpool, Toxteth)
Davidson, Viscountess
Harvey, Ian (Harrow, E.)


Birch, Nigel
Davies, Nigel (Epping)
Harvie-Watt, Sir George


Bishop, F. P.
de Chair, Somerset
Hay, John


Black, C. W.
De la Bère, R.
Head, Brig. A. H


Boles, Lt.-Col. D. C. (Wells)
Deedes, W. F.
Heald, Llonel


Bossom, A. C.
Digby, S. Wingfield
Henderson, John (Cathcart)


Boyd-Carpenter, J. A.
Dodds-Parker, A. D.
Hicks-Beach, Maj. W. W


Boyle, Sir Edward
Dormer, P. W.
Higgs, J. M. C.


Bracken, Rt. Hon B
Douglas-Hamilton, Lord Malcolm
Hill, Mrs. E. (Wythenshawe)


Braine, B. R.
Drayson, G. B.
Hinchingbrooke, Viscount


Braithwaite, Sir Albert (Harrow, W.)
Drewe, C.
Hirst, Geoffrey


Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)
Dugdate, Maj. Sir Thomas (Richmond)
Holmes, Sir Stanley (Harwich)


Bromley-Davenport, Lt.-Col. W.
Duncan, Capt. J. A. L
Hope, Lord John


Brooke, Henry (Hampstead)
Dunglass, Lord
Hopkinson, Henry


Browne, Jack (Govan)
Duthie, W. S.
Hornsby-Smith, Miss P


Buchan-Hepburn, P. G T.
Eccles, D. M.
Horsbrugh, Rt. Hon. Florence


Bollock, Capt. M.
Elliot, Rt. Hon. W. E
Howard, Gerald (Cambridgeshire)


Bullus, Wing Commander E. E.
Erroll, F. J.
Howard, Greville (St. Ives)


Burden, F. A.
Fisher, Nigel
Hudson, Sir Austin (Lewisham, N.)


Butcher, H. W
Fort, R.
Hudson, Rt. Hon. Robert (Southport)


Butler, Rt. Hn. R. A. (Saffron Walden)
Foster, John
Hudson, W. R. A. (Hull, N.)


Carr, Robert (Mitcham)
Fraser, Hon. Hugh (Stone)
Hurd, A. R.


Carson, Hon E
Fraser, Sir I. (Morecambe &amp; Lonsdale)
Hutchinson, Geoffrey (Ilford, N.)


Channon, H.
Fyfe, Rt. Hon. Sir David Maxwell
Hutchison, Lt.-Com. Clark (E'b'rgh W.)


Clarke, Col. Ralph (East Grinstead)
Galbraith, Cmdr. T. D. (Pollok)
Hutchison, Col. James (Glasgow)




Hyde, Lt.-Col. H. M.
Molson, A. H. E.
Snadden, W. McN


Hylton-Foster, H. B.
Monckton, Sir Walter
Soames, Capt. C.


Jennings, R.
Morrison, John (Salisbury)
Spearman, A. C. M.


Johnson, Howard (Kemptown)
Morrison, Rt. Hon. W. S (Cirencester)
Spence, H. R. (Aberdeenshire, W.)


Jones, A. (Hall Green)
Mott-Radclyffe, C. E
Spens, Sir Patrick (Kensington, S.)


Joynson-Hicks, Hon. L. W.
Nabarro, G.
Stanley, Capt. Hon. Richard (N. Fylde)


Kaberry, D.
Nicholls, Harmar
Stevens, G. P.


Kerr, H. W. (Cambridge)
Nicholson, G.
Steward, W. A. (Woolwich, W.)


Kingsmill, Lt.-Col. W. H
Noble, Cmdr. A. H. P
Stewart, Henderson (Fife, E.)


Lambert, Hon. G.
Nugent. G. R. H.
Stoddart-Scott, Col. M.


Lancaster, Col. C. G
Nutting, Anthony
Storey, S.


Langford-Holl, J.
Oakshott, H. D.
Strauss, Henry (Norwich, S.)


Law, Rt. Hon. R. K.
Odey, G. W.
Stuart, Rt. Hon. James (Moray)


Leather, E. H. C.
O'Neill, Rt. Hon. Sir Hugh
Studholme, H. G


Legge-Bourke, Maj. E. A. H.
Ormsby-Gore, Hon. W. D.
Summers, G. S.


Lennox-Boyd, A. T.
Orr, Capt. L. P. S.
Sutcliffe, H.


Lindsay, Martin
Orr-Ewing, Charles Ian (Hendon, N,)
Taylor, Charles (Eastbourne)


Linstead, H. N.
Orr-Ewing, Ian L. (Weston-supcr-Mare)
Taylor, William (Bradford, N.)


Llewellyn, D.
Osborne, C.
Teeling, W.


Lloyd, Rt. Hn. G. (King's Norton)
Perkins, W. R. D.
Thomas, J. P. L. (Hereford)


Lloyd, Maj. Guy (Renfrew, E.)
Peto, Brig. C. H. M
Thompson, Kenneth Pugh (Walton)


Lloyd, Selwyn (Wirral)
Pickthorn, K.
Thompson, Lt.-Cmdr. R. (Croydon, W.)


Lockwood, Lt.-Col. J. C.
Pitman, I. J.
Thorneycroft, Peter (Monmouth)


Longden, Gilbert (Herts, S.W.)
Powell, J. Enoch
Thorp, Brig. R. A. F


Low, A. R. W.
Price, Henry (Lewisham, W.)
Tilney, John


Lucas, Sir Jocelyn (Portsmouth, S.)
Prior-Palmer, Brig. O
Touche, G. C.


Lucas, P. B. (Brentford)
Profumo, J. D.
Turner, H. F. L.


Lucas-Tooth, Sir Hugh
Raikes, H. V.
Turton, R. H.


McAdden, S. J.
Rayner, Brig. R
Vane, W. M. F.


McCorquodale, Rt. Hon. M. S.
Redmayne, M.
Wade, D. W.


Macdonald, A. J. F. (Roxburgh)
Remnant, Hon. P
Wakefield, Edward (Derbyshire, W.)


Macdonald, Sir Peter (I. of Wight)
Renton, D. L. M.
Wakefield, Sir Wavell (Marylebone)


Mackeson, Brig. H. R.
Roberts, Emrys (Merioneth)
Walker-Smith, D. C


McKie, J. H. (Galloway)
Roberts, Maj. Peter (Heeley)
Ward, Hon. George (Worcester)


Maclay, Hon. John
Robinson, Roland (Blackpool, S.)
Ward, Miss I. (Tynemouth)


Maclean, Fitzroy
Robson-Brown, W.
Waterhouse, Capt. Rt. Hon. C


MacLeod, lain (Enfield, W.)
Rodgers, John (Sevenoaks)
Watkinson, H.


MacLeod, John (Ross and Cromarty)
Roper, Sir Harold
White, Baker (Canterbury)


Macpherson, Major Niall (Dumfries)
Ropner, Col. L.
Williams, Charles (Torquay)


Maitland, Cmdr. J. W.
Russell, R. S.



Manningham-Buller, R. E
Ryder, Capt. R. E. D.
Williams, Gerald (Tonbridge)


Marlowe, A. A. H.
Salter, Rt. Hon. Sir Arthur
Williams, Sir Herbert (Croydon, E.)


Marples, A. E.
Sandys, Rt. Hon. D.
Wills, G.


Marshall, Douglas (Bodmin)
Savory, Prof. D. L.
Wilson, Geoffrey (Truro)


Marshall, Sidney (Sutton)
Scott, Donald
Winterton, Rt. Hon. Earl


Maude, Angus (Ealing, S.)
Shepherd, William
Wood, Hon. R.


Maude, John (Exeter)
Smiles, Lt.-Col. Sir Walter



Maudling, R.
Smithers, Peter (Winchester)
TELLERS FOR THE AYES:


Medlicott, Brig. F.
Smithers, Sir Waldron (Orpington)
Major Wheatley and Mr. Vosper


Metlor, Sir John
Smyth, Brig J. G. (Norwood)





NOES


Acland, Sir Richard
Burke, W. A.
Delargy, H. J.


Adams, Richard
Burton, Miss E.
Diamond, J.


Albu, A. H.
Butler, Herbert (Hackney, S.)
Dodds, N. N.


Allen, Arthur (Bosworth)
Callaghan, L. J
Donnelly, D.


Allen, Scholefield (Crewe)
Carmichael, J.
Dugdale, Rt. Hon. John (W. Bromwich)


Anderson, Alexander (Motherwell)
Castle, Mrs. B. A
Dye, S.


Anderson, Frank (Whitehaven)
Champion, A. J
Ede, Rt. Hon. J. C


Attlee, Rt. Hon. C. R
Chetwynd, G. R
Edelman, M.


Awbery, S. S.
Clunie, J.
Edwards, John (Brighouse)


Ayles, W. H.
Cooks, F. S.
Edwards, Rt. Hon. Ness (Caerphilly)


Bacon, Miss Alice
Coldrick, W.
Edwards, W. J. (Stepney)


Baird, J.
Collick, P.
Evans, Albert (Islington, S.W)


Balfour, A
Cook, T. F.
Evans, Edward (Lowestoft)


Barnes, Rt. Hon A. J
Cooper, Geoffrey (Middlesbrough, W.)
Evans, Stanley (Wednesbury)


Bartley, P.
Cooper, John (Deptford)
Ewart, R.


Bellenger, Rt. Hon. F. J
Corbet, Mrs. Freda (Peckham)
Fernyhough, E.


Benn, Wedgwood
Cove, W. G.
Field, Capt. W J


Benson, G.
Craddock, George (Bradford, S.)
Fletcher, Eric (Islington. E)


Beswick, F.
Crawley, A.
Follick, M.


Bing, G. H. C
Crosland, C. A. R
Forman, J. C.


Blenkinsop, A.
Crossman, R. H S
Fraser, Thomas (Hamilton)


Blyton, W. R.
Cullen, Mrs A
Freeman, John (Watford)


Boardman, H.
Daines, P.
Freeman, Peter (Newport)


Booth, A.
Dalton, Rt. Hon. H.
Gaitskell, Rt. Hon. H. T. N


Bottomley, A. G.
Darling, George (Hillsborough)
Ganley, Mrs. C. S.


Bowles, F. G. (Nuneaton)
Davies, A. Edward (Stoke, N.)
Gibson, C. W.


Braddock, Mrs. Elizabeth
Davies, Ernest (Enfield, E.)
Gilzean, A.


Brook, Dryden (Halifax)
Davies, Harold (Leek)
Glanville, James (Consett)


Brooks, T. J. (Normanton)
Davies, Stephen (Merthyr)
Gooch, E. G.


Broughton, Dr. A. D. D
de Freitas, Geoffrey
Greenwood, Anthony (Rossendale)


Brown, Thomas (Ince)
Deer. G.
Greenwood, Rt. Hon. Arthur (Wakefield)







Grenfell, Rt. Hon. D. R.
McGovern, J.
Silverman, Sydney (Nelson)


Grey, C. F.
McInnes, J.
Simmons, C. J.


Griffiths, David (Rather Valley)
Mack, J. D.
Slater, J.


Griffiths, Rt. Hon. James (Llanelly)
McKay, John (Wallsend)
Smith, Ellis (Stoke, S.)


Griffiths, W. (Manchester Exchange)
Mackay, Rt. W. G. (Reading, N.)
Smith, Norman (Nottingham, S.)


Gunter, R. J.
McLeavy, F.
Snow, J. W


Haire, John E. (Wycombe)
MacMillan, Malcolm (Western Isles)
Sorensen, R. W.


Hale, Joseph (Rochdale)
McNeil, Rt. Hon. H.
Soskice, Rt. Hon Sir Frank


Hale, Leslie (Oldham, W.)
MacPherson, Malcolm (Stirling)
Sparks, J. A


Hall, Rt. Hon. Glenvil (Colne Valley)
Mainwaring, W. H.
Steele, T.


Hall, John (Gateshead, W.)
Mallalieu, E. L. (Brigg)
Stewart, Michael (Fulham, E)


Hamilton, W. W.
Mallalieu, J. P. W. (Huddersfield, E.)
Strachey, Rt. Hon. J.


Hannan, W.
Mann, Mrs Jean
Strauss, Rt. Hon. George (VauxhaH)


Hardy, E. A.
Marquand, Rt. Hon H A
Stross, Dr. Barnett


Hargreaves, A.
Mathers, Rt Hon G
Summerskill, Rt. Hon. Edith


Hastings, S.
Mayhew, C. P
Sylvester, G. O.


Hayman, F. H.
Mellish, R. J
Taylor, Bernard (Mansfield)


Henderson, Rt. Hon. A. (Rowley Regis)
Messer, F.
Taylor, Robert (Morpeth)


Hewitson, Capt M.
Middleton, Mrs. L.
Thomas, David (Aberdare)


Hobson, C. R.
Mikardo, Ian.
Thomas, George (Cardiff)


Holman, P.
Mitchison, G R
Thomas, lorwerth (Rhondda, W.)


Holmes, Horace (Hemsworth)
Moeran, E. W.
Thomas, Ivor Owen (Wrekin)


Houghton. D.
Monslow, W.
Thorneycroft, Harry (Clayton)


Hoy, J.
Moody, A. S.



Hubbard, T.
Morgan, Dr. H. B.
Thurtle, Ernest


Hudson, James (Ealing, N.)
Morley, R
Timmons, J.


Hughes, Emrys (S. Ayrshire)
Morris, Percy (Swansea, W.)
Tomney, F.


Hughes, Hector (Aberdeen, N.)
Mort, D. L
Turner-Samuels, M.


Hynd, H. (Accrington)
Moyle, A.
Ungoed-Thomas, Sir Lynn


Hynd, J. B. (Attercliffe)
Mulley, F. W
Usborne, H.


Irvine, A. J. (Edge Hill)
Nally, W
Vernon, W. F


Irving, W. J. (Wood Green)
Neal, Harold (Bolsover)
Viant, S. P.


Isaacs, Rt. Hon. G. A.
Oldfield, W. H.
Wallace, H. W


Janner, B.
Oliver, G. H.
Watkins, T. E.


Jay, D. P. T.
Orbach, M.
Webb, Rt. Hon M (Bradford, C


Jeger, George (Goole)
Padley, W. E
Weitzman, D.


Jeger, Dr. Santo (St. Pancras, S.)
Paget, R. T.
Wells, Percy (Faversham)


Jenkins, R. H.
Paling, Rt. Hon. W. (Dearne Valley)
Wells, William (Walsall)


Johnson, James (Rugby)
Pannell, T. C
West, D G.


Johnston, Douglas (Paisley)
Pargiter, G. A
Wheatley, Rt. Hn. John (Edinb'gh, E)


Jones, David (Hartlepool)
Parker, J.
White, Mrs. Eirene (E. Flint)


Jones, Frederick Elwyn (West Ham, S.)
Paton, J.
White, Henry (Derbyshire, N E)


Jones, Jack (Rotherham)
Pearson, A.
Whiteley, Rt. Hon. W.


Jones, William Elwyn (Conway)
Peart, T. F.
Wigg, G.


Keenan, W.
Popplewell, E
Wilcock, Group Capt. C A B


Kenyon, C.
Porter, G.
Wilkins, W. A.


Key, Rt. Hon. C. W.
Price, Joseph T. (Westhoughton)
Willey, Frederick (Sunderland)


King, Dr. H. M.
Proctor, W. T.
Witley, Octavius (Cleveland)


Kinghorn, Sqn. Ldr E
Pryde, D. J.
Williams, David (Neath)


Kinley, J.
Pursey, Commander H.
Williams, Rev. Llywelyn (Abertillery)


Lang, Gordon
Rankin, J.
Williams, Ronald (Wigan)


Lee, Frederick (Newton)
Rees, Mrs. D.
Williams, Rt. Hon. Thomas (Don V'lly)


Lee, Miss Jennie (Cannock)
Reeves, J.
Williams, W. T. (Hammersmith, S.)


Lever, Harold (Cheatham)
Reid, Thomas (Swindon)
Wilson, Rt. Hon. Harold (Huyton)


Lever, Leslie (Ardwick)
Reid, William (Camlachie)
Winterbottom, Ian (Nottingham, C.)


Lewis, Arthur (West Ham, N.)
Richards, R.
Winterbottom, Richard (Brightside)


Lewis, John (Bolton, W.)
Robens, Rt. Hon. A.
Wyatt, W. L.


Lindgren, G S.
Roberts, Goronwy (Caernarvonshire)
Yates, V F.


Upton, Lt.-Col. M.
Robertson, J. J. (Berwick)
Younger, Rt. Hon. K.


Logan, D. G.
Rogers, George (Kensington, N.)



Longden, Fred (Small Heath)
Royle, C.
TELLERS FOR THE NOES:


McAllister, G.
Shinwell, Rt. Hon. E.
Mr. Bowden and


MacColl, J. E.
Shurmer, P. L. E.
Mr. Kenneth Robinson.


McGhee, H. G.
Silverman, Julius (Erdington)



Question put, and agreed to.

8.15 p.m.

Mr. Turton: I beg to move, in page 10, line 45, at the end, to insert:
on the provision of machinery or plant for the purposes of agriculture or.
The effect of this Amendment is that agricultural machinery and plant shall be excluded from the repeal of initial allowances. The ground on which I put this forward is that agriculture is part of the defence programme. On a previous Amendment the Economic Secretary to the Treasury said that there was no party

political division on this matter but that it was the view of the Government that expenditure on modernisation should be damped down in certain directions. Is not agriculture part of that defence programme, and is not modernisation of agriculture an essential part of our aim in order to be well defended?
There is certainly a great political division on whether agriculture ought not to have been included in the defence programme to a greater extent. In fact, agriculture has not had a special defence programme since the international tension


increased. The Government have been relying on the 1947 five-year plan that was devised for economic and not for defensive reasons. It happens that this five-year agricultural programme is due to reach its peak in the year 1952–53, and yet this particular Clause will first have its effect in that vital year. I ask the Economic Secretary to consider the effect on that programme of including the provision of agricultural machinery and plant in this Clause.
The Economic Survey of this year reported the progress that has been made towards reaching the targets set up in the 1947 agricultural programme. We were told that last year we stepped up from 39 per cent. over the 1936–39 average to 40 per cent. As hon. Members know, the target is 50 per cent. above the 1936–39 production level. That means that we have to obtain 10 per cent. in two years. In other words, we must step up our production by five times the increase of last year. That cannot be done without more modernisation of agriculture and without more machinery and plant.
Another factor also comes into this question. Prior to this year, in order to aid the modernisation of agriculture and help farmers to increase their capital equipment the Government have injected into the price review a certain sum for capital equipment. The White Paper, "Annual Review and Fixing of Farm Prices, 1951," which was published recently noted that in agriculture there had been
…reports of increasing credits stringency in the industry…
Notwithstanding that fact, the Government cut the capital injection for the current year by £10 million and have said that future provisions for capital injections would be progressively reduced thereafter.
Therefore, we may assume that in the 1947 five-year expansion programme there will be this progressive cut in the capital injection at the same time as the full weight of the abolition of the initial allowances from agricultural machinery and equipment. That will have very serious repercussions on our food defence plan at the present time. The whole business of providing agricultural machinery is one in which there is a

constant conflict between export and home demand.
The statistical digest shows that in 1948 the export share of the agricultural machinery output was 40 per cent. In 1949 and 1950 the export share had risen to 50 per cent. That means that although the output of agricultural machinery in this country has expanded, the share that home agriculture was getting of that agricultural machinery was round about the same level last year as it was two years before.
In fact, I think £41 million was spent on agricultural machinery for home agriculture in 1948; it dropped to £37 million in 1949 and went back again to £41 million in 1950. Therefore, the total of the initial allowances lost to agriculture if that level is maintained is £16 million. If we add to that the loss of capital injection, it would appear that the extra cost to agriculture in the direction of modernisation is somewhere in the region of £26 million to £36 million. I believe that is a false economy.
The effect of the exclusion of these initial allowances from agricultural machinery and plant and rising costs must be taken into account in determining the next February Price Review. In other words, modernisation is going to be slowed up and at the same time the burden on the food consumer in this country will be increased as a result of taking this step in the Bill.
I hope the Economic Secretary will consider this matter in those aspects because this will not be a measure of deflation but, from the agricultural point of view, it will have an inflationary effect. That is something which the Chancellor said on the Committee stage in this connection he was very anxious to avoid at the present time. If we are going to increase the British share of agricultural production we must change over to new types of farming in certain respects. To give a very clear illustration, we must have more meat produced in this country if we are to increase the meat ration. That means that we should encourage farmers to introduce certain types of machinery such as grass drying plant, silage machinery and all machinery that is devised for producing more feeding-stuffs at home. This Clause does not have that effect.
There are two alternatives which the Economic Secretary should consider. He ought to consider giving us the whole of our case and excluding agricultural plant and machinery from this Clause, or alternatively he ought to exclude from this Clause those types of agricultural machinery and plant which will assist agriculture to make the change-over from other branches of agriculture to the production of feedingstuffs at home so as to facilitate the production of meat.
There is a great difference between the agricultural industry and other industries in connection with initial allowances. I have listened to all the debates on the subject of initial allowances. Hon. Members have talked of large firms and great businesses. Here we are dealing with the small capitalist who has no capital with which to undertake very large schemes of modernisation. His financial stringency has already been noted by the Government in their last White Paper on the subject, and it is a fact that the banks are very chary about extending their credit to agriculture at present.
In every country in the world special provision is made for agricultural credit, because the agriculturist is a small capitalist who needs considerable help from the Government. Until now we have had these initial allowances on agricultural machinery and plant. By the Chancellor's action in the Budget they are removed. I hope that in his reply the Economic Secretary will make it clear that, on second thoughts, the Chancellor realises that agriculture has a part to play in the defence programme and should be encouraged.

Mr. Snadden: I beg to second the Amendment.
The Amendment was very ably proposed by my hon. Friend the Member for Thirsk and Malton (Mr. Turton). My basic objection to the abolition of these initial allowances springs from the fact that it will do exactly what the Chancellor intends it should do—it will discourage farmers from purchasing machines and plant at a time when the need to expand our own home food production was never greater and at a time when the agricultural industry is being exhorted to increase its efficiency.
We have only to read the White Paper on farm prices referred to by my hon. Friend to see what is the Government's view on that. I do not say that I disagree with it; I am entirely in favour of increasing efficiency, but there comes a time when rising costs get ahead of technical efficiency, and in my opinion that time has now arrived. The removal of these allowances will affect agricultural efficiency and therefore will act as a brake in the process of bringing costs down. which is of paramount importance today.
Since the inauguration of the expansion programme in 1947, the agricultural industry has admittedly gone a long way in capitalising production to meet the demands of the expansion programme, but I do not think anyone will deny that there is still a very real need for new and modern equipment, made doubly urgent because of the steep rise in the cost of production and also because of the shortage of skilled labour. Here I would say to the Minister that the intending call-up of agricultural workers, to which I personally take no exception, is a relevent factor in this matter, and there is no doubt that in many cases, at any rate in my part of the country, in Scotland, the farmer's only solution to the labour problem and the decreasing number of skilled workers on the land, is to increase efficiency through the medium of labour-saving equipment of the most modern standard.
I am not an economist, but I recognise that at the end of the day, when the farmer comes to sell or scrap his machine, it will not make any difference whether or not he had an initial allowance, because it seems to me that if he has had no initial allowance the depreciation allowance will be larger and the balancing charge will mean that the whole cost of the machine has been allowed. I am subject to correction, but I understand that that is the position.
8.30 p.m.
Nevertheless, the fact remains that the initial allowance which we have enjoyed up to date is a very great help in alleviating the initial burden of buying a machine at highly inflated prices. We have only to look over the range of machinery and prices today to see—as anyone who goes to the Royal Show in Cambridgeshire, if the can get away to


do so, will see—how enormously expensive agricultural machinery is today. When I entered the agricultural industry 30 years ago, I could buy a machine for about an eighth of what I have to pay today.
This initial allowance has amounted to a loan tax-free from the Treasury to encourage and assist the purchase of necessary machinery in order to increase agricultural efficiency, and I do not think that the problem is solved by giving a year's notice of the change, because farmers do not necessarily have either the money or the credit to allow them to purchase these machines, and at the same time, there is delay in delivery, and the very fact that a year's notice has been given will cause a scramble for the existing machinery, and I think that is bad.
My hon. Friend the Member for Thirsk and Malton (Mr. Turton) has mentioned one or two points that occur to all of us, and I am not going to repeat what he has said. I would simply say that discontinuance of this allowance so soon after the decision to raise the rate to 40 per cent. would seem to me to be evidence of an extraordinary lack of continuity in Government policy, even after making allowance for re-armament, and I believe that the removal of this allowance will have an adverse effect upon home food production at a time when we all know that overseas supplies are becoming more and more uncertain. I plead with the Government to reconsider this point very seriously, and, if possible, to accept this Amendment.

Sir Ian Fraser: The policy of this country of continually increasing the prices which we pay for the products of the land is one which is the subject of substantial argument, and many think that the present prices are not adequate but I want to ask the House to look at this thing from a very broad point of view. That policy cannot go on for ever and indefinitely, because it is clearly a very expensive way of getting production from the less well-equipped or the less well-managed farms. If we are to get continuing and increasing agricultural production, it seems to me that it must come out of two things: one is the bringing into production of land which has not hitherto been profitable, and the other is the making of existing

farming more efficient. Either of these two policies depends upon capital investment in agriculture.
All of us want the wages in the agricultural industry to be maintained and, if possible, increased. Every one of us is familiar with the difficulty of the farmer who says that new industries arise in the rural districts which are able to offer more attractive remuneration than that which the farmer can pay, and all of us realise that the costs of every kind of agriculture are increasing. It therefore seems to me that the long-term and the medium-term future of our agricultural industry depend upon a national policy which does everything possible to encourage investment in the land and in farming and in machinery for farming.
This step which has been taken by the Chancellor—his general sweeping away of initial allowances, and his unwillingness up to the present to make an exception in the case of agriculture—seems to me to be a deterrent to the most economical way of getting more food out of British land. For that reason, I beg of him to reconsider his attitude in this matter, and to realise that there is no other way so economical to secure more food to be grown in Britain than to encourage capital investment in the land.
There is no other way in which wages can be maintained and increased so economically as to encourage mechanisation. There is no method available to this nation of getting more food out of the land which will repay us more abundantly than to make it worth the while of the small farmer capitalist to put his money into better machinery and better apparatus. To alter the taxation law so that such a process becomes more burdensome to him is not merely discouraging to him but is contrary to the national interest.

Mr. J. Edwards: Nothing that has been said so far about the importance of agriculture would, I think, be denied on this side of the House. What I would contest is the rightness of the deduction which hon. Members have drawn from the importance of agriculture. I may say, in passing, that I think it a great pity the hon. Member for Thirsk and Malton (Mr. Turton) should have implied that he and his hon. and right hon.


Friends were more interested in and more concerned about the welfare of agriculture than we on this side of the house. I am provoked into calling on my memory.
In the early 'twenties I was a young bank clerk in what is now an extremely prosperous agricultural community, and when I look back I remember what was happening to agriculture in those years. While it may doubtless be true that agriculture can still be improved, I believe that agriculture has never been stronger, never been in better heart, and never been better able to meet emergencies than it now is. That is not to say that there is not more to be done, but I believe that to be true. Therefore, I do not hold the rather pessimistic view which hon. Gentlemen opposite have put forward.
Of course it is a pity if we have to do anything which impedes modernisation and the introduction of more and more machinery into agriculture. It is a pity if in industry as well we have to hinder the introduction of these things, and we all regret it. But it will not do for hon. Members opposite to take the line that they are entitled to think of agriculture in this narrow way. I beg of them not to exaggerate. After all, what is the position we are discussing? We are discussing what happens when the farmer contemplates buying a piece of new apparatus and he is faced with the fact that there is to be withdrawn from him from 1952 a loan for about one-quarter of the cost. No one can suggest that the full effect of that will be felt. As I said on a previous Amendment, this is a marginal matter. I am sorry that it has to be done—

Mr. Turton: When the hon. Gentleman says one-quarter of the cost he means 40 per cent. of the cost.

Mr. Edwards: No, not if the tax is reckoned. It is more like one-quarter than anything else at the present level of taxation. If the hon. Gentleman works it out I think he will find that I am right, and that it is about one-quarter. Therefore, do not let it be suggested that everybody will then stop buying machinery. That is not what is going to happen. Marginally there will be changes. We are sorry that they have to be made.
I do not, however, agree that there will be a scramble in the present year for machinery—

Mr. Turton: Since the Budget, the prices of second-hand machinery have gone up by something like 50 per cent.

Mr. Edwards: No doubt people who want machinery will try to get it quickly, but there cannot be a scramble for new machinery when the order books are pretty full and the waiting lists for some things are long.
I beg hon. Gentlemen opposite not to take a narrow view about our exports. If we are to sustain the burden of re-armament, we must try to expand exports where we can. Looked at from the point of view of hon. Gentlemen opposite, who are always telling us about the need of importing coarse grains and so on, I would point out that even the things that agriculture wants can only be secured if we can earn enough by our exports to buy them.
Agricultural machinery cannot be exempted from this need in the present circumstances, important though it is for our agriculture to be modernised. Looked at from the narrow point of view, if I were speaking specifically for the agricultural industry, I should recognise that there must be marginal diversion of resources from home to export if we are to earn the wherewithal to buy the things without which a part, at any rate, of our livestock industry in this country cannot be maintained.

Mr. Hurd: We do not export much agricultural machinery to Russia or the Argentine—the two countries from which we hope to get a good deal of coarse grain.

Mr. Edwards: The hon. Gentleman knows that we do not have to export it to precisely the same countries. We still have a large amount of multilateral trading. What we earn in one place, we may use to buy coarse grains from another place. While I do not want to restate the great difficulties that we have in selecting particular classes of assets which are of particular importance to the national economy as a whole—and what I said in the debate on the Committee stage on this still stands—I think that it would be wrong to do this. Even on


narrow agricultural grounds, hon. Members opposite have concentrated on one part of the picture when it is necessary to look at it comprehensively.

Mr. Henderson Stewart: The Economic Secretary has not, I think, considered another aspect of this problem, the aspect of the agricultural machinery industry itself. I have already intimated to the House that I have an interest in that matter, and I repeat it now. I am speaking because I happen to know a little about this business.
The Economic Secretary talked about the importance of exports. He will know better than most of us the very marked increase in the export side of the British agricultural machinery industry in recent years. Last year I went out with a delegation from the machine industry to Canada, with the approval of the Board of Trade. I will not say that entirely as the result of our efforts, but following upon our efforts, we have shown a very substantial increase in our exports of British-made farming machinery to Canada. As the hon. Gentleman knows, we are now selling British machines to America. We sold a good many last year to the Argentine, and we hope to get a good deal of further trade from the Argentine and the hard currency area.
This is the proposition which I put to the hon. Gentleman. If, indeed, this industry, which is one of the oldest British industries, is now making a substantial contribution to the dollar-earning capacity of our country from these exports, it cannot be sound policy on the part of the Government to decrease the home trade of that industry. This industry, like the motor trade and every other industry, needs an almost guaranteed home market to enable it to expand its export market. That is an economic truth which cannot be disputed.

8.45 p.m.

Mr. J. Edwards: I think the hon. Gentleman will agree that, while the suspension of initial allowances on agricultural machinery will have a relatively small effect on the industry and the amount involved will be trifling, the trifling expansion of exports would be worth having.

Mr. Stewart: That is a matter of opinion. We have not yet reached 1952, so that none of us can say with certainty

what the position will be, but there are signs now in all branches of the industry of a certain reluctance to purchase on the part of farmers. It may seem that what I am saying conflicts with some of the things my hon. Friends have said, but in fact it is not so. The enormous increase in the cost of production forces us to increase our selling prices. The prices of farm machinery have undoubtedly risen to a very high figure, and next year they are bound to be still higher. The shortage of material, the difficulty of getting it, the increase in the cost of plate, and so on, all contribute towards those higher prices.
At the same time the farmers' expenses have risen, and I predict, with some slight measure of confidence, that next year farmers will not be able to buy the machinery to the same extent as they buy it now. One of the reasons militating against their doing so is this business of initial allowances. Does the Economic Secretary consider this policy to be wise? I hope that between now and next year, when the policy will come into effect, he will get into touch with the machinery industry, and consult with those who are skilled in this matter, because in a year's time serious consequences to that industry may result.

Mr. Joynson-Hicks: I feel that the House is entitled to protest at the way in which it is being treated. Just now we had an important debate on a question of education and there was no Minister present from his Ministry. Now we are considering a matter of agriculture and there is no Minister whatever from the Ministry of Agriculture. In saying that I do not intend any disrespect to the Economic Secretary, but it is obvious from what he said that he has no personal, direct knowledge of the agricultural industry or of what is going on in it. It would be of the very greatest help to the House if we could have the benefit of the advice of the Ministers who are concerned with these Amendments. I see the hon. Member for Wednesbury (Mr. S. N. Evans) in his place. I do not know whether the Minister of Agriculture has been detained elsewhere at the moment and has sent the hon. Member as a deputy to take notes of what is going on.

Mr. S. N. Evans: The right hon. Gentleman is away shaking the feather-bed.

Mr. Joynson-Hicks: Even so, I do not think the House would accept the excuse for the Minister not being here. The hon. Member should be on our side in this Debate, for he is always demanding greater efficiency in the agricultural industry. It is for the sake of efficiency that we are pleading with the Government to grant the agricultural industry this exemption from the decision to abolish initial allowances.
As I understood from the original statement of the Chancellor of the Exchequer, the fundamental reason, quite apart from all the economic arguments which have been advanced since, for the abolition of the initial allowances was to try to cut off the demand on the engineering industry for plant and machinery so as to aid production of machinery for defence orders.

Mr. J. Edwards: And for exports.

Mr. Joynson-Hicks: Yes. If that were so, which I am quite prepared to accept, the argument cannot be applied to the agricultural industry, because that industry is equally important for the defence of this country as any programme which may be advanced by the Government in connection with re-armament. The Government have already seen fit to recognise the essential need to exempt the shipping industry. If the shipping industry, to the extent to which it has been exempted, can be freed from the abolition of initial allowances, so should the agriculture industry. The two industries are complementary parts of the defence programme.
I am very glad that the Minister did not claim that a policy had been pursued by the Government of giving to the industry sufficient capital to enable it to renew plant and machinery without the assistance of this interest-free loan, which, it is recognised, the initial allowance really is. That is not so. There has undoubtedly been from time to time the intention of injecting capital into the industry, but I have never yet found a farmer who recognised, from the figures of his own returns and his bank balance, that that policy had achieved success. What has happened is that while the policy has been followed, it has lagged so far behind rises in prices and increases in costs that the producer in the agricultural industry has had to bear additional costs which have more than absorbed the

capital injected into the industry during the past five years.
With regard to what will happen, the Government may be assured that the agricultural industry will do what it has done throughout the whole of its history—

Mr. Gooch: Play the game.

Mr. Joynson-Hicks: Yes, it will play the game. It will do everything within its power, and a great deal more than most people credit it with having the power to do, to achieve the target which has been set for it. Farmers, workers, and the ancillary parts of the industry will collaborate to do everything they can to meet the demand. If the Government make things more difficult, it will lead to disappointment and to an increasing sense of frustration, and the Government will find that the efforts of the industry cannot be converted into results.
In regard to the horticultural industry, I hope hon. Members have taken the opportunity of seeing the show which was put on in London recently. They will have seen the tremendous strides made in quality, grading and packing, which have all been achieved as a result of new and modern machinery. If it is to be continued—it is by no means current practice throughout the industry—and improved further, so that the public in this country are able to enjoy the best quality horticultural produce, it can only be done by the installation of additional machinery. If the Government insist upon removing initial allowances, that will be yet another blow at the advancement, efficiency and improvement of the industry. It will be another disincentive—to use the Government's own expression—to the industry's achieving the result which we all desire.
There is a third point which is particularly important in the agricultural industry. The industry is primarily made up of comparatively small units, which lack the capital necessary for comparatively big capital investment. Therefore, if the whole of their effort is to be concentrated, as it is being concentrated at the present time, upon trying to stock up with machinery, it is interrupting the planning of their programme, which is of a much longer term than the Government's planning, and it is disorganising the whole balance of their production and outlook. For this reason, as well as for


many others which could be advanced, I claim that there is a special case for the agricultural industry and one which the Government ought to recognise.

Mr. Maclay: I want to correct a remark made by my hon. Friend the Member for Chichester (Mr. Joynson-Hicks). He implied that the shipping industry had been freed from the abolition of the initial allowance.

Mr. Joynson-Hicks: To an extent.

Mr. Maclay: I should like to make it quite clear to agriculturists who might be casting envious eyes on the shipping industry that we are in exactly the same boat and we feel very sad about it. We need our initial allowances, too.

Amendment negatived.

Mr. J. Edwards: I beg to move, in page 11, line 4, at the end, to insert:
or that a contract for the construction of the ship, or of the engines for the ship, for those persons had been entered into by them not later than the said tenth day of April.
I should first point out that the proviso to subsection (1) exempts from the suspension of initial allowances any payments, even though they may be made after 5th April, 1952, on account of ships which were actually under construction for a trader on Budget day.
When the question of the position of shipbuilding was discussed during the Committee stage we had before us two Amendments. One which was moved by the hon. and gallant Member for Scotstoun (Colonel Hutchison) sought to preserve the right to initial allowances in respect of ships contracted to be bought before 6th April, 1952, and the other, which was moved by the hon. Member for Renfrew, West (Mr. Maclay), sought to preserve the right to initial allowances in respect of ships contracted to be bought before Budget day.
At the time, I made it clear that we could not accept the principle involved in the first Amendment, but I said that, without finally committing myself, I would consider whether it was possible to agree that ships contracted to be bought before Budget day should get the benefit. We have reviewed the matter, and my right hon. Friend has reached the conclusion that there is good ground for excluding from the suspension of initial allowances cases where a contract for the

construction of a ship or the engines for the ship had been entered into not later than Budget day.
At the same time I said that we should welcome discussions with representatives of the industry. Discussions have taken place between the representatives of the shipping industry and the Board of Inland Revenue, and I take this opportunity of expressing my gratitude to the representatives of the industry for the help they have given us. In the Amendment there is a reference to the engines for the ship. It was thought, after consultation with the industry, that if a contract for the ship's engines had been placed before Budget day it was only right to give initial allowances in respect of the expenditure on the provision of the ship, whether the contract for the construction of the ship itself had or had not been entered into before Budget day. The Amendment is in addition to and not in place of the exception under the proviso in subsection (1), because there may be some cases where a ship-owner undertakes the construction of his own ship.

9.0 p.m.

Mr. Maclay: Naturally, those of us who have been very concerned about the effect of the Bill on shipbuilding and the re-building and modernisation of the British merchant marine were worried at the original proposals for the total abolition of initial allowance as they first appeared in the Bill. We were worried that those provisions would have a very serious effect on building within the next few years, and we are grateful to the Chancellor, to the Economic Secretary and to their advisers for the trouble they have taken in devising the wording which now appears on the Order Paper.
It has been a question—we started with the Budget Speech; then we came to Second Reading, and then to the Committee stage, and now we are on Report —of feeling towards a wording which would cover what, I believe, was the Chancellor's intention after the Budget speech, that those ship-owners who before Budget day had made decisions to build ships, believing that they would qualify for the initial allowances, should get those allowances; otherwise, grave inequity would have resulted and, possibly, there would have been a serious distortion of the existing building programme.
I think we have now reached a position where those owners who had placed ships in that belief are covered. It has been difficult to find a way to do so, because the technical conditions in the shipping industry in relation to building are not simple. We on our side thank the Economic Secretary for his courtesy in this rather technical problem, and for arranging also that technical discussions should take place outside the House.
But having said that, and after thanking the Chancellor and the Economic Secretary for the work they have done in this respect, one must come back to the original position, which was argued, I admit, at some length in the late hours of the night and in the early hours of the morning for a very long time.

Mr. Manuel: Hear. hear.

Mr. Maclay: The hon. Member says, "Hear, hear." He will, however, admit that the importance of the shipping industry to the nation is such, not only in peace but as an essential part of the defence of the country, as to justify even another 12 hours' discussion had it continued.

Mr. Manuel: I quite agree, as long as we can differentiate the relative importance of the ship-owners and the shipping industry.

Mr. Maclay: I do not think we are quarrelling. The shipping industry is what matters. The individual owner is an individual owner; the industry is vital to the nation, and I am glad that the hon. Member has gone on record to that extent.
There were three things that we hoped might happen, in a certain order. One was that shipping would be taken completely out of the suspension of initial allowances. Even the agriculturists present agree, I think, that shipping is in an even more exceptional position than agriculture, because without shipping neither the Army, the Navy nor the Air Force can function, nor can the coarse grains, which are so dear to the hearts of agriculturists, get into this country.

Mr. Joynson-Hicks: I am quite sure that if the agriculture industry has to find itself in the same boat with any other industry, it would prefer shipping.

Mr. Maclay: That was the first main case that we wanted. The Government have decided in the course of discussions that they cannot exempt the shipping industry, and I must repeat the warning which I have given before, because it should be fully appreciated. The effect of suspending initial allowances on shipping cannot really do anything to ease the pressure on the armament industry and on the investment programme, which is, I understand, the main purpose of the suspension of initial allowances, because the effect will not, and cannot, be felt for two or three years.
Therefore, if we avoid war and if, as we all hope and pray, the pressure of rearmament eases off, all that is being achieved by suspending initial allowances on shipping is the risk of changing the mood which determines building in a very delicate industry; a mood which may, if it is changed, bring the risk that three, four or five years from now there may be unemployment in the yards, which would otherwise not have taken place had these allowances been maintained and the industry had gone on with its long-term replacement programme, as it thought it could do, before the Budget speech. That is what I want to emphasise. We are giving a serious warning that the suspension may have serious consequences, depending on the state of the re-armament programme and whether we are successful in avoiding war.
On the second point, we tried to establish in an earlier debate that a year of grace should be allowed. The Economic Secretary made it clear that he could not grant it. I think a certain case has been made by the Government, but it is hard that people who were just on the point of concluding contracts on Budget day may fall outside this concession because the final decision was made just after Budget day. We hope some latitude will be possible by which a contract to build need not necessarily be a formal document with a stamp on it, but a clear decision on the part of the owners to build and, on the part of the builder, to accept the order to build. There are many varied practices in the shipping industry about placing contracts for ships, and I am sure that there must be a little latitude for determining finally what is a contract.
I have made my main point, that there is a real danger in not exempting shipping altogether from the suspension of initial allowances and, having said that, I repeat my appreciation of the way in which the technical argument has been handled.

Colonel Clarke: I support my hon. Friend in regretting that these allowances have been withdrawn. In this connection I was astonished earlier to hear the hon. Gentleman say that these were being withdrawn because of the Korean situation—

Mr. J. Edwards: Mr. J. Edwards indicated dissent.

Colonel Clarke: I understood him to say that the reason for withdrawing initial allowances was because of the Korean situation. I was surprised that it could relate to ships, because the weakness of the world shipping position was shown up by the war in Korea. That, aggravated by the necessity to import American coal last winter, raised the freight markets in an alarming way and showed up our real weakness in shipping. I also dispute the statement that the withdrawal of a quarter of the money that has to be found for payment immediately on buying anything makes very little difference.

Mr. Edwards: May I interrupt the hon. and gallant Gentleman? I am sorry to do so, but he must realise that when I talked about Korea I was speaking to an Amendment seeking to maintain initial allowances generally. I was not talking about shipping. Of course, I had it in mind that I was going to make a concession on shipping, even if the hon. and gallant Gentleman did not know it. Also, he must not refer now to what I said on agriculture as though it applied to shipping. I made it plain that there was a unique service in shipping.

Colonel Clarke: The hon. Gentleman will have to be kept in compartments, because the impression I had was that he was talking on the general situation when he mentioned Korea. The fact that we have to pay a quarter more immediately in the case of a ship which may cost half a million pounds—not a big ship, but a 10,000 ton freighter—is substantial, especially in view of the enormous rise in costs in the last 10 or 12 years. I

know more about coasting tonnage than about deep sea shipping and I know that it rose from £14 a ton in 1934 to £58 in 1948. Although some of it may be because of improvement in design, it is mainly on account of the great increase in costs.
I want to emphasise that I think it a great pity these allowances are being withdrawn and to support what has been said in regard to the fact that the system and method of paying for ships differs from that of a good many other chattels one buys and which can be paid for at once.

Amendment agreed to.

Clause 24.—(POWER TO OBTAIN INFORMATION AS TO INTEREST PAID OR CREDITED WITHOUT DEDUCTION OF TAX.)

Mr. Jay: I beg to move, in page 16, line 32, at the end, to insert:
and (b) the year specified in a notice under this subsection shall not he a year ending more than three years before the date of the service of the notice.
This Amendment in effect meets the substance of the proposal contained in the previous Amendment to line 20 on the Order Paper in the name of the hon. and learned Member for Kensington, South (Sir P. Spens) and the hon. Member for Chichester (Mr. Joynson-Hicks). The Amendment is to provide that no one paying untaxed interest shall have to make a return of the list of recipients of such interest for any year earlier than three years before the date on which he has to make the return. That is the substance of the proposal in the previous Amendment, and the effect is that the return shall not go back for more than three years.

Mr. Joynson-Hicks: On behalf of my hon. and learned Friend the Member for Kensington, South (Sir P. Spens) and myself, I wish to express appreciation of the fact that on this point, at any rate, the Government have seen the light, and it is not the red light.

Amendment agreed to.

Mr. Boyd-Carpenter: I beg to move, in page 17, line 1, to leave out subsection (3).
This Amendment deals with that part of the Clause which imposes upon those who carry on banking business the duty


to disclose interest payments. The subsection relates to the Post Office Savings Bank, and the Amendment seeks to delete from the Clause the words which impose on the Postmaster-General the duty to disclose to the Inland Revenue particulars relating to the Post Office Savings Banks.
This matter was raised towards the end of a sitting of rather longer than usual duration during the Committee stage and was then dealt with, perhaps inevitably, rather perfunctorily. There are two points of importance which seem to arise on it, one largely of a technical nature and the other going into the merits. I will first deal with the technical issue.
The subsection we seek to delete imposes the duty of furnishing to the Inland Revenue particulars relating to Post Office Savings Bank interest and, as I pointed out in Committee, that raises a question of the inter-action of this subsection with Section 4 of the Post Office Savings Banks Act, 1861. The relevant Section states:
The Officers of the Postmaster-General engaged in the Receipt or Payment of Deposits shall not disclose the Name of any Depositor nor the Amount deposited or withdrawn, except to the Postmaster-General, or to such of his Officers as may be appointed to assist in carrying this Act into operation.
That imposes a perfectly clear prohibition, which, I do not think the Financial Secretary will contradict, has been observed for 90 years, on the disclosure of Post Office Savings Bank interest. I believe I am right in saying that, in deference to the provisions of that Section, the Postmaster-General has refused to disclose particulars of savings bank interest, either to the Ministry of Pensions or the Assistance Board or any Government Department.
9.15 p.m.
The first issue which arises is whether, assuming that what the Government wish to do by the present subsection is right, they are setting about it in the right way; because no attempt is made in the present Bill to repeal the Section of the 1861 Act which I have just read. I raised the matter in Committee, and as neither of the Law Officers of the Crown is at the moment present, I think it would be only fair if I read to the House the words used on this point by the Attorney-General. He said:
Both the hon. and learned Member for Norwich, South, and the hon. Member for

Kingston-upon-Thames referred to Section 4 of the Post Office Savings Banks Act, 1861. If they will look more closely at that Section, they will see that it deals with making disclosure otherwise than to the Postmaster-General. The Clause we are talking about does not place any obligation on the officers of the Postmaster-General. It places an obligation on the Postmaster-General himself. [HON. MEMBERS: "Oh."] Well, that is how the thing stands, dealing with it on a purely legal plane. That is its legal effect, but whether that is the effect the Committee desire is another point. Subsection (4) says that the Act shall apply
'in relation to the Post Office Savings Bank as if it were a trade or business carried on by the Postmaster General.'
The result of that, read in conjunction with subsection (1), shows that the obligation on the Post Office Savings Bank is an obligation placed upon the Postmaster-General himself. In that sense, when Section 4 of the 1861 Act is looked at more closely, there is no conflict between the two, but I would go further and say that even if there were a conflict it is quite clear that the terms of the latter Bill must be regarded as to that extent superseding the former Act. It was suggested that there should have been a specific repeal of the former Act, but I do not think that is possible, because the former Act remains in force for a great many purposes and it would not be desirable or possible to repeal it; but if to that extent there is a conflict, then the later Act would supersede the original one.
Perhaps in fairness I ought to say also that, in reply to a question by me as to whether or not what the Attorney-General had said meant that, on that argument the Postmaster-General personally was the channel of communication to the Inland Revenue, the right hon. and learned Gentleman said:
No, the advice that I give is that the Postmaster-General is under an obligation and he can discharge that obligation through any person he authorises, including one of his own Officers."—[OFFICIAL REPORT, 8th June, 1951; Vol. 488, c. 1623–4.]
Then, I regret to say, the OFFICIAL REPORT goes on to say:
Several Hon. Members rose—
and it is indicated that the deputy chief Government Whip then used what I am bound to say is much the best argument that the Government have used throughout these debates, and moved the Closure. Now, in the absence, I am glad to say, of the deputy chief Government Whip—or at any rate until he returns—we are in a position to deal with the merits of the answer given by the Attorney-General, whom, I am sorry to say is not here.
I am bound to say that it is quite an extraordinary argument. At the moment we have the position that there remains on the Statute Book the Post Office Savings Banks Act, 1861, which forbids —although I cannot tell the House what is the penalty—officers of the Postmaster-General from disclosing particulars of, among other things, interest payments to anybody except the Postmaster-General. Then we have the subsection which we are here seeking to delete, imposing, as the Attorney-General has said, on the Postmaster-General the duty of disclosing these facts to the Inland Revenue. I will concede for the moment that there is no express prohibition in the 1861 Act on the Postmaster-General making that disclosure. It may be that on a narrow construction the Postmaster-General can do it.
But the Attorney-General went further and said that the Postmaster-General, being under an obligation to do it, could do it through one of his officers. With very great respect to that argument, if those officers do it, they would seem to me, I am bound to say, to be acting in conflict with the prohibition placed upon them by the Act of 1861. The matter becomes even more serious in view of the fact that the Attorney-General was not content to say that the Postmaster-General could do it personally—and I am bound to say that anything that kept him innocently occupied might be a good thing—but went on to say that his officers would, in fact, have to do it in the normal course of administrative business.
It really is highly unsatisfactory from every point of view to introduce legislation now under which, according to the Attorney-General, the officers of the Postmaster-General have to do something which is expressly forbidden by a statutory protection which is continued in force. That must be unsatisfactory. I do not want to weary the House by going into an argument whether or not a later statute can by implication, though not expressly, repeal an earlier one. I am concerned with the practical question with which we are faced. It is quite wrong to put public officers in that position, and if it is desired to take away from depositors in the Post Office Savings Bank the protection which it has been public policy to give them by Statute for 90 years, then

at least the Government should have the moral courage to come forward and repeal Section 4 of the Act of 1861.
The Attorney-General said that could not be done because the Act generally remained in force. Of course it does. All I am suggesting now, as I suggested on the previous occasion, is that we should repeal those parts of the Act which impose these prohibitions. It goes beyond sloppy draftsmanship—we are accustomed to that in this House—to leave unrepealed a prohibition upon the very act which, according to the principal Law Officer of the Crown, officers of the Post Office are to be called upon under this Bill to undertake.
I hope that when the Financial Secretary replies he will address himself in the first place, to this question. Granted that what he is seeking to do is right—and that is a hypothesis which Isuppose he will accept—is he, in fact, going about it in a workmanlike way, and is he really, now that there has been a chance to reconsider the argument, accepting the view which on the spur of the moment the Attorney-General put forward, that it was all right to do this because the orders of the Postmaster-General to do a thing more than countervailed the more express prohibition in the Statute which prevented them from doing it?
I wish to say one word more on the merits of the matter, and I can sum up that argument in these words. As I said, for 90 years it has been public policy under a variety of Governments to preserve the security, in the technical sense, of deposits in the Post Office Savings Bank. It is now sought—whether in a workmanlike manner or otherwise I will not at this stage attempt to argue—to take away that protection, and to compel the Postmaster-General to disclose to the Inland Revenue details of entries paid in excess of £15. I have no doubt that is highly convenient to the Inland Revenue, but the mere convenience of the Inland Revenue is, surely, no reason for overthrowing what has been administrative practice and political doctrine for a matter of 90 years.
Hon. Members, and especially those who operate large bank accounts, may perhaps appreciate the desire for secrecy about their affairs which I believe affects a large number of small depositors in the Post Office. I wonder very much


whether such gains in administrative ease for the Inland Revenue as may be obtained by this subsection will be really worth while reducing—perhaps only psychologically but still reducing—the feelings of security and of confidence which the small depositors have in the Post Office. The Financial Secretary to the Treasury knows better than any man how difficult it is to stimulate small savings now. Is it wise at this moment of all moments to diminish this feeling of confidence which this class of small savers may have?
I wonder whether it is wise; and I wonder, when it is done in the interest of the prevention of tax evasion, the Financial Secretary will come forward and say that large numbers of black market operators place their ill-gotten gains in the Post Office on interest and defraud the Revenue? If he does, he lives in a world of unreality. I believe that the Government are setting out in the wrong way to do what they are seeking to do; they are risking putting officers of the Post Office in difficult and embarrassing positions with the conflicting duties imposed upon them, and, finally, they are setting out to do the wrong thing.

Mr. H. Strauss: I beg to second the Amendment.
I am sorry I missed the opening remarks of my hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), but I wish to address the Financial Secretary particularly on the first point my hon. Friend raised. It was during the speech of the Financial Secretary in Committee that I put the point about Section 4 of the 1861 Act and asked whether this Section did not conflict with the duty he was imposing on the officers of the Post Office by this Clause and, if it was so conflicting, why the Section of the 1861 Act was not included among the repeals.
The Financial Secretary quickly took the advice of his right hon. and learned Friend the Attorney-General and was good enough to give that advice to the House. He thought there was nothing in the Section which would prevent the carrying out of the obligations imposed by the Clause. At a later stage, my hon. Friend the Member for Kingston-upon-Thames quoted the actual Section, which I need

not repeat because it has been quoted again now, and the reply of the Attorney-General will be found in the OFFICIAL REPORT of 8th June, 1951. at columns 1623–24.
The prohibition imposed by Section 4 of the 1861 Act is an absolutely unqualified prohibition, prohibiting the officers of the Postmaster-General from even disclosing the name of the depositor except to the Postmaster-General or to such of his officers as may be appointed to assist in carrying that Act into operation.
If the Clause we are now considering becomes an Act of Parliament, the officers of the Postmaster-General may be ordered by the Postmaster-General—for that is the effect of the answer of the AttorneyGeneral—to disclose the name of the depositor to somebody who is neither the Postmaster-General nor one of his officers. That is a direct conflict, on the face of it, with the prohibition contained in the 1861 Statute. Suppose they are brought to account before the courts of this country for their breach of the 1861 Statute. Does the Financial Secretary to the Treasury say it would be any answer to plead that they were given an order by the Postmaster-General? His learned Friends will be familiar with the doctrine, if he is not, that obedience to orders is not an answer to a criminal offence. It is a criminal offence that is here in question. If the hon. Gentleman does not agree with that, perhaps he will give the reasons why he disagrees.
9.30 p.m.
I am assuming that the next Amendment in my name, in page 17, line 3, at the end to insert:
save to the extent necessary to comply with this section the obligation of secrecy imposed by section four of the Post Office Savings Bank Act, 1861, remains in full force and effect,
is not to be called, and therefore I raise this question, if I may be permitted to do so, on the discussion of my hon. Friend's Amendment. The conflict with the 1861 Act is apparently complete, and I suggest that, in the interests of the servants of the Postmaster-General, who will otherwise be placed in intolerable doubt as to what their duty is and whether they should obey Section 4 of the 1861 Act or obey the instructions of the Postmaster-General, the matter should be cleared up by some Amendment dealing with the extent to which the 1861 Act is repealed.
The Attorney-General on 8th June said that he did not think that to operate this Clause it was necessary to repeal Section 4 of the 1861 Statute, but that if he were wrong on that—and he was good enough to acknowledge the possibility of his being wrong—then he was confident that the 1861 Statute was to that extent repealed. Is that a fair position in which to leave the servants of the Postmaster-General? I suggest it is not. The servants of the Postmaster-General should be quite certain that, if they carry out the instructions that the Postmaster-General gives them in his own attempt to carry out this Clause if it becomes law, they will not be acting contrary to the duty imposed upon them by the 1861 Act.
I sympathise with the Financial Secretary to the Treasury because on this occasion he has not got the legal help of his right hon. and learned Friend, but the fact that my hon. Friend the Member for Kingston-upon-Thames had proposed the deletion of this subsection and that I had my Amendment on the Order Paper must have warned him fully of the point that was going to be made, and I hope he will give a satisfactory reply.

Mr. Jay: I can assure hon. Members that anything I may say is the view of my right hon. and learned Friend the Attorney-General as well as myself, and I fully consulted with him and others on this point since the earlier debates.
The hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) raised two points—first on the merits of the inclusion of Post Office savings within the ambit of this Clause, and secondly on the relation of the Finance Bill to the Act of 1861. On the first question of the merits, the simple position seems to us to be this. We are under this Clause requiring institutions such as banks to make returns to the Inland Revenue of interest paid to depositors which is already income subject to tax.
We are not in this Clause making any income taxable which was not taxable before. We are merely saying that where it is taxable it should be returned to the Inland Revenue. If we do that there does not seem to be any good case for imposing that obligation on banks and certain other savings institutions and omitting the Post Office, in that the Post Office interest is, like the other interest, already income subject to tax. That is the simple postion,

and it seems to us conclusive in favour of including the Post Office within the Clause.
The hon. Member for Kingston-upon-Thames quite rightly pointed out the great importance of small savings and the desirability, with which I entirely agree, of encouraging and maintaining small savings at present. But however desirable it may be to encourage savings, I do not think we ought to do it by giving a sort of covert exemption from Income Tax for what is really taxable income.
Secondly, as to the relation of this Bill to Section 4 of the Post Office Savings Act of 1861, the hon. and learned Member for Norwich, South (Mr. H. Strauss), asked me a question at some rather curious hour of the day or night and I gave him what was admittedly rather a perfunctory answer. Because of the circumstances of the case it could be nothing else. I congratulate him upon his research, if it was his, into the 1861 Act, but although my answer was perfunctory we are convinced, after a good deal of further consideration, that it was nevertheless correct.
Up to a point the facts are much as they were stated by the hon. Member for Kingston-upon-Thames. The 1861 Act says that the officers of the Postmaster-General must not disclose details about deposits in the Post Office except to the Postmaster-General. What this Clause does is to lay an obligation upon the Postmaster-General to give certain relevant information to the Inland Revenue. So far, therefore, there is no conflict between the two. In our view, if the Postmaster-General, in discharging his obligation under the present Bill to give information to the Inland Revenue, in practice does so, as no doubt he would, by deputing the job to one of his officers, then he is doing no more constitutionally than to give information as Postmaster-General to the Inland Revenue, as he is required to do under the Clause.

Mr. H. Strauss: Will the hon. Gentleman deal with this point? The point is not what the Postmaster-General is doing, but what the servants of the Post Office are doing. However laudable and however much it may be under instructions, the servants of the Postmaster-General will be disclosing the name of a depositor to somebody other than the Postmaster-General or a servant of the Postmaster-


General and, on the face of it, that is a violation of the Statute.

Mr. Jay: I know that that is the hon. and learned Gentleman's argument, but the view we take is this. After all, the officers of any Minister act as his agents and constitutionally, of course, it is always the Minister who is acting.

Mr. Strauss: No.

Mr. Boyd-Carpenter: Is the hon. Gentleman advancing the proposition that because a public servant is acting on the instructions of his Ministerial superior he is therefore exempted from the criminal penalties imposed by Statute?

Mr. Jay: What I am saying is this— that the Postmaster-General is authorised, and indeed is under an obligation, by the Bill to give this information. If he authorises one of his officers, under those powers, to discharge that task, he is doing no more than this Bill requires him to do. That is the position as we see it and for that reason, although perhaps the hon. and learned Gentleman may not agree, there does not seem to us, on the further consideration which we have given to it, to be any real conflict between the two requirements.

Mr. Strauss: May I put this point to the hon. Gentleman before he sits down? It is possible for us to have a further reply from the Attorney-General, if necessary. The fact that the Postmaster-General may be protected and may be authorised by this subsection to give the information does not in itself mean that anybody else will be authorised to do it, even on his instructions. It is on that point that I hope we shall get a reply from the right hon. and learned Gentleman.

Mr. Turner-Samuels: It does not say the Postmaster-General. It says the Post Office.

Sir Patrick Spens: Despite the interesting information given to the House by the Financial Secretary to the Treasury, I have the very gravest doubts whether the advice which he has been given and which he has passed on to the House is right. May I ask him this question? Has he considered the effect of subsection (2)? The Postmaster-General, under subsection (3), is to be deemed to be a person carrying on business, and

under subsection (2) notice may be served on any branch, and the officer of that branch is liable to give the information.

Mr. Douglas Houghton: These accounts are held centrally, and not in the local post offices at all.

Sir P. Spens: That may be the answer of the Financial Secretary to the Treasury, but, as far as I know, accounts are kept at local post offices. [HON. MEMBERS: "No."] Under subsection (2) it appears to me—and this is the point that I am raising—that it would be possible to serve a notice on a local postmaster, who then, under subsection (2), has the duty in that capacity of giving the information that is asked for.
Whatever directions the Postmaster-General passes on to his subordinates, he cannot pass on directions that are contrary to a statute which lays down that if such and such a thing is done it is an offence. He cannot give directions to do that, and the suggestion—I was going to call it a quibble, but I do not think that it would be polite to the Financial Secretary to the Treasury—the suggestion that the Postmaster-General is going to depute the giving of this information for and on his behalf is still going to be no protection in law against what is, so far as I can see, an offence against the provisions of the 1861 Act.
Surely, as the matter had been called to the attention of the Government, it would have been all too easy to put in a small Amendment which would have saved all this trouble. As it is, it is almost certain that this question will go to some court or another. It may be that the court will be able to take the view that has been advanced from the Treasury Bench; but, of course, one cannot too often remind the House that nothing that is said from the Treasury Bench in the course of a debate is any direction to His Majesty's judges, and they will take their own view as to how these two Measures conflict. It may be that the answer that they will give will show that the Treasury is right. I think it is more probable that the answer will be given that will show that my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss), is right. But why should this conflict of the two Measures be left at all? Why do not the Government in a case like this put


in some Amendment that would get rid of the trouble altogether?

Mr. Black: I think we have all listened with a feeling of very great disappointment to the reply given by the Financial Secretary to the Treasury. There is just one short point on the merits of the case that I want to bring to his notice. The Financial Secretary said that the Government could see no reason in this case for differentiating between interest paid on Post Office Savings Bank accounts and interest paid gross on other bank accounts. I should like to bring to his notice one reason why I think that there are good grounds for suggesting that a line can be drawn.
It is normally the case that an individual is not permitted to invest more than £2,000 in the Post Office Savings Bank. There is that limit ordinarily on the amount of the investment that an individual can make; so that when we are dealing with the Post Office Savings Bank, if we assume a maximum investment of £2,000 by an individual and the current rate of interest of 2½ per cent., the maximum interest that can be paid to an individual is £50 a year. Thus the operation of this Clause really falls within the narrow limits of interest of over £15 payable, which is the downward limit imposed by the Clause, and interest of £50 per annum in the upward direction, that being the maximum amount of interest which can be received by an individual who has his maximum investment in the Post Office Savings Bank.
9.45 p.m.
When the position is compared with that of the joint stock banks, there is no limit on the amount of the deposit that an individual can have in a joint stock bank. There may be vast amounts of annual interest which are not bearing the taxation they ought to bear, and there may be a very great leakage of tax on interest on joint stock bank accounts. That consideration cannot apply to the Post Office Savings Bank because of the limit on the amount of an individual's investment. I suggest that, apart from the other reasons which have been advanced, that is a very good reason why interest on Post Office Savings Bank

deposits can and should be differentiated from interest on deposits in other institutions.

Mr. McAdden: I must apologise for being the first hon. Member on this side of the House not a member of the legal profession to intervene on this point. I do not want to follow the legal arguments which have been put forward with such skill by my hon. and learned Friends, but I do want to say a few words on the general question of this subsection.
As I understand it, it is the view of hon. and right hon. Gentlemen opposite that it is necessary to have these powers in order to prevent widespread tax evasion. I am sure that we all agree that tax evasion is something which should be discouraged. On the other hand, I do not agree that the general trend of the majority of people in this country is to evade their tax.

Mr. Speaker: This seems to be an argument on the Clause. We are now discussing subsection (3), dealing with the Post Office Savings Bank.

Mr. McAdden: I am proposing to confine my remarks to those members of the public of whom it is suggested that they are evading their tax liabilities by failing to disclose the interest accrued on their savings in the Post Office. I believe that the majority of depositors are honest, and that they do disclose their savings. In respect of the remaining few who do not, the Inland Revenue already have powers, which they use considerably, to try to find out what those savings are.
The hon. Member for Sowerby (Mr. Houghton) knows perfectly well that if the Inland Revenue suspect that anybody has failed to disclose the amount of interest earned on his savings, they do not hesitate for one moment to make an entirely fictitious assessment in order that the person concerned shall assist by proving to the Commissioners whether or not the assessment is fictitious. Those powers exist without this subsection, and could reasonably be used in order to bring to justice those who are evading taxation in future as in the past, without the necessity of this subsection which pries into the private affairs of Post Office Savings Bank depositors who, in the main, are thoroughly honest and reliable people.

The Attorney-General: I am sorry that I did not hear most of the arguments upon the question whether Section 4 of the Post Office Savings Banks Act conflicts with subsection (3) of the Clause now under discussion. Possibly I should have been shaken in my view if I had heard them. Perhaps I might make this suggestion, as hon. Members opposite have doubts as to whether there is a conflict. Possibly the difficulty might be resolved if you would allow me, Mr. Speaker, at a later stage to move a manuscript Amendment in the following form: In page 17, line 3, at the end insert:
This subsection shall have effect notwithstanding anything in section four of the Post Office Savings Banks Act, 1861, but save as aforesaid that section shall remain in full force and effect.

Mr. H. Strauss: Has not this the same effect as would have followed if my Amendment had been called and adopted?

Mr. Boyd-Carpenter: I am very glad that the right hon. and learned Gentleman has appreciated that there is a point which, although it does not relate to the merits of the matter, does relate to the common interest of this House in seeing that legislation is properly drafted. I will not dwell on this issue as to whether there was any coincidence between the similarity of the form of the Attorney-General's Amendment and that which we had on the Order Paper in the name of my hon. and learned Friend the Member for Norwich, South (Mr. H. Strauss). I am well satisfied that an effort is now being made to tidy up this Statute, and in order to clear the way for the manuscript Amendment—

Mr. Pickthorn: Wait a minute.

Mr. Boyd-Carpenter: I was proposing to seek the leave of the House to withdraw the Amendment. I do not know whether my hon. Friend has particular reasons for desiring to continue the argument, but I think that the chief purpose which I set out to achieve will be met. I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

The Attorney-General: I beg to move, as a manuscript Amendment, in page 17, line 3, at the end, to insert:
This subsection shall have effect notwithstanding anything in Section four of the Post Office Savings Banks Act. 1861, but save as

aforesaid that section shall remain in full force and effect.

Mr. Pickthorn: I only want to ask one very short question. Will the Attorney-General explain to us what is the difference between the effect of this Amendment and the effect of the Amendment standing in the name of my hon. and learned Friend which was not called, otherwise it becomes a little difficult to see why one Amendment is called and not the other?

Amendment agreed to.

Mr. Jay: I beg to move, in page 17, line 8, at the end, to insert:
and if a person to whom any interest is paid or credited in respect of any money received or retained in the United Kingdom by notice in writing served on the person paying or crediting the interest—

(a) declares that the person who was beneficially entitled to that interest when it was paid or credited was not then ordinarily resident in the United Kingdom; and
(b) requests that the interest shall not be included in any return under this section,

the person paying or crediting the interest shall not be required to include that interest in any such return; and section thirty of the Income Tax Act, 1918 (which relates to fraudulent claims for relief), shall, with the necessary adaptations, apply in relation to notices under this subsection as it applies in relation to the claims mentioned in the said section thirty.
This Amendment is intended to give effect to an undertaking my right hon. Friend gave in response to an Amendment proposed in the Committee stage by the right hon. Member for Blackburn, West (Mr. Assheton). My right hon. Friend wanted us to exclude from the obligation to return bank interest for tax purposes residents abroad. His argument was, I think, that we did not wish by the imposition of this obligation to deter overseas traders and persons resident abroad generally from having bank accounts in this country and giving business to the City of London and providing earnings by way of invisible exports and so forth. My right hon. Friend agreed to carry that out, and we have attempted to do so by this Amendment.
I should like to explain to the right hon. Gentleman and to the House why we found it rather more difficult to carry out that undertaking than we anticipated at the time. The object was to exclude residents abroad from the scope of the Clause. When, however, we consulted


the banks as to the advisability of excluding residents abroad as such, they pointed out that it was not within the knowledge of a bank in the ordinary course of business whether or not a customer was in the full sense of the word ordinarily a resident abroad. All that they would normally know would be the address of the customer concerned. The suggestion, therefore, was that we should exclude any person with an address outside the United Kingdom.
It seemed to us, however, that if we adopted that solution we should open the door to rather obvious evasion of the whole purpose of the Clause, since it would be only necessary if there were such persons who wished to evade it for them to give the bank an address abroad which was merely an address for the purpose of forwarding documents, thereby avoiding the whole obligation.
We have, therefore provided that there shall be an exemption where the recipient of such interest actually notifies in writing the person paying—that is to say the bank —that the person beneficially entitled to that interest when its was paid was not ordinarily resident in the United Kingdom. I think that carries out the purpose which the right hon. Gentleman had in mind, is practicable from the banks' point of view, and reasonably safeguards the Revenue against loss.

Mr. Assheton: I am indebted to the hon. Member and to the Chancellor for what he has done here. I was aware that the words of my original Amendment probably raised certain difficulties of that sort, but I knew it was much better to leave it to the wisdom of the Board of Inland Revenue as to the arrangements to be made with the banks. I am sure that the House will be glad that the Chancellor of the Exchequer has seen his way to do so, and we are all grateful to him.

Mr. Frederic Harris: In regarding persons resident abroad under this Clause, surely there should be some general stipulation laid down of over six months resident abroad?

Mr. Jay: They would have to be the persons who are usually defined as "ordinarily resident abroad."

Amendment agreed to.

Clause 26.—(PUBLIC UTILITY UNDERTAKERS TO BE LIABLE TO THE PROFITS TAX.)

Mr. Jay: I beg to move, in page 18, line 7, at the beginning, to insert:
subject, as respects losses, to the provisions of subsection (3) of this section.
This Amendment and those in lines 7 and 30, are designed to carry out the undertaking which I gave affecting the Profits Tax paid by public utilities. The House will recall that this Clause brings public utility companies within the scope of the Profits Tax at 10 per cent. It was argued by several hon. Members in Committee that in addition we should allow losses during the previous six years to be set off against profits for Profits Tax purposes. It seemed to us that it was going back too far to say six years, but that it was justifiable to go back to 1947, which was the year when the Profits Tax was substantially amended to its present form. What this Amendment does is to enable losses back to 1947 to be carried forward for that purpose.

Mr. S. O. Davies: I am certain there are hon. Members who are pleased with the concession that has already been announced by the Financial Secretary, but may I be allowed to express my profound disappointment at the narrow way in which the Treasury have drafted this Amendment. Surely it could have been extended to cover certain public utility undertakings entirely run by local government bodies. Representations have been made, not entirely on the Floor of this House, to the Treasury, and I want to express my disappointment that more consideration was not given to them.
10.0 p.m.
I am expressing my disappointment at the very narrow limitations of the Amendment, and asking the Treasury to reconsider Clause 24 and have the good sense, if not the common decency, not to try to apply Profits Tax to undertakings which are making no profit at all. I should like to develop that point, but you might find it would be out of order. Mr. Speaker. A protest should be made, and I make the protest, at the somewhat callous way in which the Treasury are making this proposal.

Amendment agreed to.

Further Amendments made: In page 18, line 7, after "incurred," insert:
in any accounting period ending.

In line 30, at the end, insert:
(3) Notwithstanding anything in proviso (b) to subsection (1) of this section, there shall he carried forward under paragraph 2 of the Fourth Schedule to the Finance Act, 1937, to the first accounting period ending after the end of the year nineteen hundred and fifty, and, if and so far as is necessary, to subsequent accounting periods, the amount, if any, which could have been carried forward to that accounting period if the said subsection (1) had applied to all accounting periods ending after the end of the year nineteen hundred and forty-six:

Provided that—

(a) in no event shall any loss incurred in any accounting period ending at or before the end of the year nineteen hundred and forty-six he taken into account for the purposes of this subsection; and
(b) where an accounting period falls partly before and partly after the end of the year nineteen hundred and forty-six, the loss, if any, for so much of that period as fell after the end of that year shall be so taken into account instead of the loss, if any, for the whole of the period, and the provisions of section forty-seven of the Finance Act, 1947, shall, with any necessary adaptations, have effect for the purpose of determining the first-mentioned loss as they had effect for the purpose of determining the profits tax payable for so much of any chargeable accounting period as fell after the end of that year.—[Mr. Jay.]

Clause 28.—(EFFECT OF CAPITALISATION OF PROFITS ON RATE OF PROFITS TAX.)

The Attorney-General: I beg to move, in page 21, line 23, at the end, to insert:
or redeemable preference shares so issued.
This Amendment is designed to meet a point made by hon. Gentlemen opposite in Committee, when they sought to maintain that there was no justification for excluding redeemable preference shares which were issued for cash. I undertook to consider the point, and we now agree with the argument that was then advanced.

Amendment agreed to.

The Attorney-General: I beg to move, in page 21, line 28, at the end, to insert:
and
(b) where the body corporate, society or other body has acquired any business, undertaking or property for full consideration, any loan capital issued by the body corporate, society or other body in or towards payment therefor shall be deemed for the purposes of this subsection to have been issued for full consideration paid in cash to the body corporate, society or other body.

This Amendment is designed to meet another point made by hon. Gentlemen opposite, who argued that the Clause was too limited, in that it excluded the case of a genuine purchase of an undertaking, paid for in part by loan capital issued by the body which acquired the undertaking. I move the Amendment to give effect to that argument.

Mr. Selwyn Lloyd: I see in the Amendment the words "any loan capital." Does that expression include redeemable preference shares?

The Attorney-General: There is an Amendment which deals with that point. I do not think that "loan capital" includes the preference shares.

Mr. C. S. Taylor: I beg to move, as an Amendment to the proposed Amendment, after "capital," to insert:
or redeemable preference shares.
I do not think I need say anything about this Amendment, which is consequential on the concession made by the Chancellor of the Exchequer.

Mr. Eccles: I beg to second the Amendment to the proposed Amendment.

The Attorney-General: I certainly do not think that the Amendment to the proposed Amendment is consequential, for it adds a good deal, but it is nevertheless founded on an argument which we think is well substantiated, and, having given the matter consideration, we are certainly prepared to accept it.

Amendment to the proposed Amendment agreed to.

Proposed words, as amended, there inserted in the Bill.

Clause 29.—(TRANSACTIONS DESIGNED TO AVOID LIABILITY TO THE PROFITS TAX.)

The Attorney-General: I beg to move, in page 22, line 22, at the end, to insert:
(4) Any direction of the Commissioners under this section shall specify the transaction or transactions giving rise to the direction and the adjustments as respects liability to the profits tax which the Commissioners consider appropriate.
(5) No direction shall be given by the Commissioners under this section by reason only—

(a) that, in the case of any body corporate, unincorporated society or other body, no distribution to proprietors has been


made or only a smaller distribution than might have been made; or
(b) that debentures of a company (not being a company the directors whereof have a controlling interest therein) have been issued for full consideration paid in cash to the company,

or by reason of any transaction which, or of any transactions all of which, required and received the consent of the Treasury under section thirty-three of this Act, if the consent was specially given to the transaction or transactions in question, was given before the carrying out thereof, and was given after full and accurate disclosure by the applicants for the consent of all facts and considerations material to be known to the Treasury.
(6) If—

(a) a body corporate, unincorporated society or other body furnishes to the Commissioners particulars of a transaction or transactions effected or to be effected by them; and
(b) the Commissioners are satisfied that the transaction or transactions as described in the particulars have been, or, as the case may be, will be entered into for bona fide commercial reasons and are such that no direction ought to be given under this section in respect of it or them,

they may, if they think fit, notify the body corporate, unincorporated society or other body accordingly, and thereupon their power to give a direction under this section with respect to the transaction or transactions in question shall cease:
Provided that—

(i) the particulars given under this subsection with respect to any transaction or transactions shall be such as to make full and accurate disclosure of all facts and considerations relating thereto which are material to be known to the Commissioners and, where the requirements of this paragraph of this proviso are not complied with, any notification given by the Commissioners under this subsection shall be void; and
(ii) in no event shall the giving of a notification under this subsection with respect to any transaction or transactions prevent the giving by the Commissioners of a direction under this section with respect to transactions which include that transaction or all or some of those transactions and also include another transaction or other transactions.

The Amendment is designed to give effect to a number of undertakings which I and my right hon. Friend gave during the Committee stage in reply to various arguments adduced by hon. Gentlemen opposite. I think I can summarise as follows the various points with which the long Amendment deals.
In the first place, it was urged that the Commissioners should be under an obligation to give reasonable information with regard to the matter covered by any particular direction that they might make,

and that is effected by subsection (4) of the Amendment. The House may remember that I called attention, when answering the arguments advanced, to the difficulty about the Commissioners being required to give an elaborate statement of their reasons, but I said that we would try to go as far as we could to meet the request made by hon. Gentlemen opposite, and in subsection (4) we have tried to do that.
Subsection (5) deals with various points which were made. It was argued that the fact that a company distributed a lesser amount than it might otherwise have done should not give rise to the liability of having a direction—that is dealt with in subsection (5, a)—and that the mere fact that debentures were issued should not give rise to the risk of a direction being made. We have acceded to that request except in the case of companies which are director-controlled. In the case of such companies the House will agree that there would be very considerable scope for evasion if they were within the exception which subsection (5, b) introduces.
Subsection (6) is also designed to meet a request, namely, that it should be possible to get an indication in advance from the Commissioners as to whether they would make a direction in relation to any transaction. The subsection goes further than that and also covers the case where a transaction has actually taken place. I believe that the Amendment fully meets the arguments adduced on Committee stage and I hope the House will think that it improves the Bill.

Mr. Manningham-Buller: I beg to move, as an Amendment to the proposed Amendment, to leave out "(not being a company the directors whereof have a controlling interest therein)."
The Amendment relates to subsection (5) of the proposed Amendment and the Attorney-General has made a passing reference to this point. Subsection (5) provides that:
No direction shall be given by the Commissioners … by reason only … that debentures of a company … have been issued for full consideration paid in cash to the company….
Exceptions from the general rule created by the subsection are companies of which the directors have a controlling


interest. In moving the Government Amendment to this Clause the right hon. and learned Gentleman said that exception had to be made in the case of director-controlled companies to prevent tax evasion. I should be grateful if he could explain more fully why he regards it as being necessary to draw this distinction between ordinary companies on the one hand, and companies which are director-controlled on the other, in relation to debentures which have been issued for full consideration paid in cash.
I can see that he could advance powerful arguments in the case of debentures for which the full consideration had not been paid in cash, but I am not sure that I correctly understand the logic of his argument that there should be this differentiation.

Viscount Hinchingbrooke: I beg to second the Amendment to the proposed Amendment.

The Attorney-General: The kind of evasion that might be possible supposing we did not exclude director-controlled companies would be that they might cause debentures to be issued to, for example, members of their families. It is true that it might be for full cash consideration, but as the debenture interest does not rank as a distribution for purposes of Profits Tax, a company controlled by a family or by one or two people could, by the issue of a number of debentures, so diminish the profits that very little would fall within the scope of Profits Tax.
The hon. and learned Gentleman asked why distinguish between director-controlled companies and companies not director-controlled? It may be that we are taking a risk in leaving out companies that are not director-controlled, but a business owned by two or three people would have it entirely in their hands and could do exactly as they liked. So there is much more risk in the case of such a company than there is in the case of a big public company which is unlikely to resort to the device of trying to reduce its profits by issuing a number of debentures.
That is why, in measuring up the risk involved, we felt we were justified in

taking the risk in the case of large public companies not director-controlled, but that if we went further the risk would be too great. For those reasons, we think it is necessary to exclude from the scope of this exception director-controlled companies. It does not follow that a direction must be made if they issue debentures, but we want to take them out of the scope of this automatic exception.

Mr. Manningham-Buller: In view of that explanation, I beg to ask leave to withdraw the Amendment to the proposed Amendment.

Amendment to the proposed Amendment, by leave, withdrawn.

Mr. Manningham-Buller: I beg to move, as an Amendment to the proposed Amendment, in subsection (6) to leave out "may, if they think fit," and to insert "shall."
This is a drafting Amendment and I hope it will be acceptable to the right hon. and learned Gentleman. The House will see that under subsection (6) of the proposed Government Amendment, before the Commissioners can issue a notification they have to be satisfied that a transaction has been entered into for bona fide commercial reasons. Over and above that, the Clause as it stands gives the Commissioners a discretion whether to give the notification even though that may be satisfied. If the Commissioners are satisfied, I think the obligation should be laid upon them to give the notification, since I can see no reason for their withholding it where they are satisfied that the transaction comes within subsection (6).

Mr. Selwyn Lloyd: I beg to second the Amendment to the proposed Amendment. This is an Amendment which should obviously be made to make the Government's Amendment more specific.

The Attorney-General: For the reasons advanced by the hon. and learned Member for Northants, South (Mr. Manningham-Buller), who moved the Amendment, I am quite ready to accept it.

Amendment to the proposed Amendment agreed to.

Question proposed, "That the proposed words, as amended, be there inserted in the Bill."

10.15 p.m.

Captain Crookshank: Before we part from this long Amendment, which has been moved by the right hon. and learned Gentleman, I wish to say that we are very pleased indeed to find that the Government have accepted five of the major points which were discussed at considerable length on Committee stage. If it is nothing else, it is a complete repudiation by the Government of the very unworthy message that the Prime Minister thought fit to send on 18th June to the electors at Westhoughton, when he spoke of this side of the House in these words:
Although they have no policy, the Opposition do all they can to hamper the Government by means of sham fights and late Sittings, unable to win the debate …
That just is not the fact, because the Government have on this very vital Clause accepted the contentions which were put forward from this side, which is the lie direct to the statement made by the Prime Minister.
Furthermore, this big concession—we recognise that it is a big concession by the Government—is proof to the whole world of the value of free debate in this House such as would not have obtained in, possibly, other places. We could have wished that the delay between the Committee and Report stages could have been longer, but the full debates which we have had have given time not only to the Government, but, what is equally important, to their advisers, to weigh up the arguments which have been put and which may not at first sight have leapt to their minds when the Clauses were drafted. It has given them time to reconsider these matters and to give fresh advice to the Government, which the Government can accept or refuse as the case may be. Whoever is responsible for accepting these Amendments, a large share of the credit must go to my right hon. and hon. Friends on this side of the House, who put them so cogently and lucidly at an earlier stage of our deliberations.

Mr. Lionel Heald: I desire only to add one word to what my right hon. and gallant Friend has said, in view of the importance of the matter. It must be borne in mind that great prominence was given to the Prime Minister's message in the closing stages of the Westhoughton by-election—that is a fact. It was placarded and was sent out on loudspeakers. No one suggests that the Prime

Minister would intentionally make a misleading statement, but it is right to say that widespread indignation has been caused throughout the country—[Interruption.]

Mr. Speaker: This is a bit hot. I allowed the right hon. and gallant Member for Gainsborough (Captain Crook-shank), to make a reference to the message that the Prime Minister sent, but we cannot debate the message on this Amendment.

Mr. Heald: I only wanted to say this: that I thought it would be a pity for us to dismiss this matter too summarily, because this was a case where on Committee stage we debated the Clause for 12 hours, and it was suggested that we had been wasting time and obstructing the course of business, but we are now all agreed—I hope, including the Prime Minister, although we could not gather so this afternoon—that that was a mistake and that we were not wasting time.

Viscount Hinchingbrooke: Ought not the Leader of the House, who is present, to make a formal withdrawal on behalf of the Prime Minister?

Mr. Selwyn Lloyd: Does not this emphasise the point that discussion on this case took place from 4.0 a.m. to 4.0 p.m. on 12th June?

Proposed words, as amended, there inserted in the Bill.

Amendment made: in page 22, line 42, leave out Clause 30.—[Mr. Gaitskell.]

Clause 33.—(RESTRICTION OF CERTAIN TRANSACTIONS LEADING TO AVOIDANCE OF INCOME TAX OR PROFITS TAX.)

Amendments made: In page 24, line 40, leave out "subsection," and insert "section."

In line 44, after "unlawful," insert:
unless carried out with the consent of the Treasury."—[Mr. Gaitskell.]

Mr. Eccles: I beg to move, in page 25, line 14, at the end, to insert:
Provided that nothing in paragraphs (c) or (d) of this subsection shall apply to any issue or transfer of shares or debentures made for full consideration paid in cash.
This is an important Amendment. Under the Clause transactions are made unlawful in respect of the raising of


capital abroad by companies controlled from this country and such action raises diplomatic issues as well as purely financial considerations. Particularly, subsection (c) seems to us much too wide because it would have the effect of extending Treasury control over all issues of shares or debentures made, whether in good faith and for good reasons, or to avoid tax. That is equivalent to setting up a capital issues committee here whose permission must be obtained when any foreign company belonging to or controlled by a United Kingdom company seeks to expand its business.
We feel quite sure that the Government do not intend the Clause to be as wide as that and it seemed to us, as we listened to the debate in Committee, that right hon. Gentlemen on the Treasury Bench were in ignorance of the modern practice of operating British investments overseas through a local company with a local board and allowing that local board more or less to run the company themselves, although the controlling capital interest remains in this country. That is a compromise of the kind at which British genius always arrives.
The old days, with London as the provider of capital and initiative and as the sole controller and manager of the overseas company, are passing away. The new fashion is for overseas territories to wish to have a large say in all business conducted within their boundaries. How were these two to be compromised, the old and the new? I think our business men have arrived at a very ingenious method. We retain the capital control here, but we let the local company operate on a very loose string. In particular, it is often a matter of the legal provisions of overseas territories that local directors must join the board. When those nationals become directors of these companies, they have their own responsibilities to their own people under their own laws and they will resent very much indeed the action of the Government at this particular time, with all our diplomatic troubles, in suddenly putting on a new Whitehall control over the issue of capital abroad.
Therefore, we have sought to exclude from the provisions of these two subsections what we believe the Government never had any intention of bringing into

them, namely, issues of shares and debentures made "for full consideration paid in cash." The House will know that the phrase is the Government's own words taken from the Amendment to Clause 29 which the House has passed. In these days, when working capital is scarce and when the investment capacity of the British capital market is not what it used to be, it is very necessary that we should be able to draw on the capital resources of the countries where our subsidiaries or controlled companies are operating. All hon. Members would agree that it is in the interests of British overseas companies to expand, and it is very difficult now to find in this country adequate savings to meet their requirements.
That being so, our companies will have to go to the local markets, and I have no doubt that in many of these countries where very large profits are now being made by the sale of raw materials at very high prices there is capital to be invested. It seems extraordinarily foolish that we should frighten off that capital by clauses of the type of Clause 33. The fact is that foreigners will not like this Clause at all. If hon. Gentlemen opposite could imagine the Ford Company at Dagenham desiring to raise fresh capital and having to go to Mr. Snyder and the American Treasury for permission to do so, they would, I think, realise the kind of feelings which will be stirred up by putting this sort of legislation on the Statute Book. As British people we are more conversant with the ways of international investment and we should not be so prickly about such permission as, let us say, the people in the Middle East or elsewhere, will be if they have to come to the old seat of what they believed to have been colonial exploitation.
This Clause is a measure of colonial exploitation reintroduced, and it is ironic that we should at this very time be having almost daily statements in the House about the troubles of the Anglo-Persian Oil Company and at the same time be discussing a Clause of this kind. It is a tremendous mistake to prefer the necessity of the Revenue and the counting house to the real needs of trade, and of getting on with our business. But I fear that this is all part of the insensitiveness of the Socialist Party to anything that goes on overseas. Last week it was the banishment of Tshekedi without trial; this week it is throwing this Clause in the face of


foreign Governments. It is part and parcel of a philosophy which is national and inward-looking, and which has no knowledge of the new trends going on in the world. I cannot conceive how hon. Gentlemen opposite can allow their Government to insult overseas Governments and business men in this way.
I know the sort of answer which is given, that when a company wishes to raise money for a good purpose the Treasury will give their consent. That is no answer at all. The friction is caused by having to ask for consent. That is the point at which the damage is done, and unless we can get this Amendment through I warn hon. Gentlemen opposite that it will become exceedingly difficult to carry on our overseas business in this very ingenious and delicately poised manner of the capital control resting in London, but the local directors having, as it were, enough authority to satisfy the national susceptibilities.
10.30 p.m.
We hope, therefore, that we shall not have any difficulty with this Amendment. It seems to me to follow the concession we have had on the previous Clause. Where capital is issued for full consideration, that must be in the interests of the business. It is not likely here that there will be family businesses which issue debentures for which an exception was made in the previous Clause. This is concerned with overseas investments, which on the whole are carried out by largish companies. I commend the Amendment to the House.

Mr. Selwyn Lloyd: I beg to second the Amendment.
I endorse every word my hon. Friend has said on the general aspect of this matter. I think the right hon. Gentleman will admit he has been impressed by the degree of criticism of Clause 33—Clause 32, as it was on the Committee stage. In the course of his speech in Committee, he made certain comments and promises. I am quoting from the OFFICIAL REPORT of 12th June, cols. 2202 and 2204. The first concession which he indicated he was prepared to make I think he has incorporated in a later Amendment, which reads:
(6) Notwithstanding anything in the preceding provisions of this section, in no event shall a mere transfer of assets by a body corporate not resulting in a substantial change in

the character or extent of the trade or business of that body corporate be treated for the purpose of this section as a transfer of part of the trade or business thereof.
I think that is an Amendment which he is introducing pursuant to a promise he made in col. 2202.
Then in col. 2204, he went on to deal with the question of the issue and transfer of debentures made for full consideration paid in cash. I must say that I am disappointed not to find that the right hon. Gentleman has seen fit to incorporate in the form of words the indication he then made. I agree that it was not a definite promise, but only a matter which he indicated he would consider. The right hon. Gentleman said:
It may be that we could exempt the parent company from obtaining Treasury permission for the issue of the subsidiary of additional shares to it for cash as part of a programme for development. That, I think, is certainly something which could be considered."— [OFFICIAL REPORT, 12th June, 1951; Vol. 488, c. 2204.]
So far as I can trace through these rather complicated Amendments, there is nothing in them which incorporates that matter. It seems to me that the form of words which my hon. Friend has moved certainly includes such an issue by a subsidiary company of additional shares for cash as part of a programme of development. I think the whole of this Amendment should be accepted, but if the Chancellor finds himself unable to accept the whole of it, even at this stage I hope he will consider incorporating in the Clause something covering the point he himself said he would consider.
Unless the Clause contains something like what we are proposing in this Amendment, it is definitely going to be a bar to imperial and colonial development. All the time the Government are giving lip-service to that and putting forward the pretence that they have it at heart, but when it comes to a practical matter, they are not prepared to remove such an obstacle as this. I am firmly convinced that if this Clause remains in its present form, it will be a practical obstacle to imperial and colonial development. I urge the right hon. Gentleman to reconsider what he said in col. 2204 and even at this late stage to attempt to devise means of incorporating our suggestion in the Bill. I think that much the best way is to accept this Amendment.

Mr. Gaitskell: The hon. and learned Member for Wirral (Mr. Selwyn Lloyd) quoted what I said in Committee on this particular issue of substance. What I said then was that this was the kind of thing which might be covered by Treasury consent. I was proposing then to introduce a subsection to amend the Bill in order to enable the Treasury to exempt certain categories and classes of transactions. As hon. Gentlemen will be aware, I have fulfilled that promise, and we shall be coming to the Amendment in a moment or two. It was a different thing that I had in mind there from promising to think over the introduction of an Amendment to the Bill. What was in my mind then was that this should be covered by Treasury consent.
I have nevertheless considered whether it would be possible to accept this particular form of words. I can understand that the hon. Gentleman the Member for Chippenham (Mr. Eccles) and the hon. and learned Gentleman the Member for Wirral will say to me, "If you are going to give a Treasury consent of a general character to these precise cases, that is to say, the issue or transfer of shares and debentures made for full consideration paid in cash, why do you not accept our Amendment?" The answer is that we could not in fact accept the Amendment in these terms. It would have to be much more qualified, and I will tell the House why.
If we were to accept the Amendment as it stands, it would let out one of the most serious cases of tax avoidance which we have come across. It was, in fact, I understand, proposed by one company that it should transfer shares that it held in one subsidiary to another subsidiary, and that the second subsidiary should pay the parent company by instalments in cash out of dividends received. The parent company was, in effect, receiving capital repayment instead of income, and, therefore, was avoiding taxation.
There is nothing in this Amendment to prevent that happening so I am advised, and the words "full consideration paid in cash" would very probably cover the kind of case I have mentioned. We have to lay down conditions to prevent that sort of thing from occurring. I can give the House two or three other examples of cases where this particular wording would, in fact, let out some serious cases of tax avoidance. For example, there is the case

where a company may in fact decide to split control over a subsidiary with another company, so that there are two companies instead of one and it cannot be said exactly where the control is, but there will be the same shareholders and directors. Nevertheless, they would get out of the effects of the Clause if the Amendment were carried in this form.
That is not to say that I do not appreciate the points which have been made. I do appreciate the desirability of letting out as much as we can reasonably let out, so as to interfere as little as possible, as I have said earlier, with legitimate business. But we are sure that the way to do it is by the consents, general, specific or particular, which are proposed in the later Amendment in my name.
We will certainly try to find a proper form of words to cover these legitimate transactions to which reference has been made, but I cannot accept the words on the Order Paper. It will need care, ingenuity and experience to devise words to take effect under the Amendment I am shortly to move, if we are to get the right wording. That is the reason I cannot accept the Amendment, and must ask the House to deal with the matter on the lines we have indicated.

Mr. Assheton: Certainly on this side of the House we are disappointed with the Chancellor's reply. He did not deal with the very cogent case put by the hon. Member for Chippenham (Mr. Eccles), and in particular with one aspect of it. My hon. Friend made one very strong point when he said that friction was caused in these overseas territories by the very fact that they had to ask for consent. It is no good the Chancellor saying that the Treasury will always give consent in appropriate cases. The Chancellor is always keeping his eye upon on or two cases of tax avoidance which he has come upon. He is always thinking of the odd case of tax avoidance, instead of the most important consideration of the financial position of the country.
Clause 33 is one of the most reactionary Clauses put into a Finance Bill throughout the time that I have been in the House of Commons. I cannot help thinking that he is going to make a great mistake if he does not accept the Amendment. The policy underlying the Clause is short sighted nationalism and one is


tempted to think that someone like Dr. Schacht had devised it. I suggest that we ought to accept the Amendment, and I hope that my hon. Friends will divide the House on it.

Viscount Hinchingbrooke: I think that the right hon. Gentleman's words were not chosen with the greatest care towards the end of his remarks, because he left the House, or at any rate some hon. Members on this side of the House, in some doubt whether he was going to introduce an Amendment at some stage dealing with the points raised by my hon. Friends, or whether he was going to rely ultimately upon the Treasury to secure that there shall be no tax evasion.
We have always, from the first, disliked the idea that tax avoidance should be dealt with administratively by the Treasury from time to time as, in the opinion of the Chancellor of the Exchequer, cases arise which require treatment of that kind by the Treasury. We prefer to see the matter covered by legislation. I cannot understand why the right hon. Gentleman has not been able to devise a form of words, between the Committee and Report stages, to take specific care of just these cases which he has quoted to the House.
This Amendment has been on the Order Paper for some few days. There has been knowledge in the Treasury of these cases of tax avoidance, and the Chancellor could have elaborated the Amendment which he is about to move regarding a slightly different issue by inserting words which would have taken care of these tax evasion cases. We object fundamentally to the idea that the Treasury should pounce upon people at will without coming to the House for specific approval. For that reason, I very much hope that, even if it too late this year, in next year's Finance Bill there will be introduced some words which will safeguard the situation.

Sir John Mellor: I think that the Chancellor of the Exchequer ought to be able to formulate his intentions. It seems clear from his speech that he cannot do so. He reminds me very much of a cartoon which appeared in Punch, a long time ago, of a lady who, while driving a car, had an accident. Asked why she had not given a signal, she replied, "There was no signal for what I wanted to do."
I really feel that the Chancellor ought to be able to tell us about his intentions. If he knows them, he should be in a position to suggest appropriate words for the qualification of the Amendment which has been put forward which would give a reasonable result. As it is, the right hon. Gentleman is asking us to rely upon Treasury consents. We have had a lot of experience of that sort of thing. The right hon. Gentleman has talked about having advisory committees to assist the Treasury. I do not attach much importance to that. I am disappointed that he has not accepted the Amendment or suggested an alternative.

Mr. F. Harris: When the hon. Member for Chippenham (Mr. Eccles) raised this matter in Committee, we felt as strongly about it as we do tonight. It appears from the Chancellor's speech that he assumed that the House agreed with the arguments which he has put forward; but apparently he has not seen fit to consult with the Treasury officers to see if something could be devised to find an answer to this problem. From a colonial point of view, nothing will give our friends overseas more concern than to have to apply to the Treasury over here for permission for any transaction they wish to make for the just development of their own interests.
10.45 p.m.
It is extraordinarily shortsighted that the real effect of this Clause is not fully understood either by the Chancellor or by his advisers. If the Chancellor had paid real and due regard to the importance of the issue that has been raised, he would have done something about it and not just assumed that the answer is to apply for and automatically obtain Treasury consent. Surely to devise no answer to this problem and merely to assume that everybody is working with some warped mind to try and avoid tax is a poor way of looking at such a serious issue.
As far as the colonial interests are concerned, I can say with real feeling that many of our interests abroad will be deeply perturbed if they believe that in any action they take to develop their businesses and eventually to benefit this country they have to come cap in hand to the Treasury for permission. We are taking a retrograde step here which one day we shall know should never have been taken.

Mr. Eccles: I can only speak with the leave of the House, but I should like to say to the Chancellor that, of course, it is possible that a certain amount of revenue might be lost by some of the transactions aimed at in this Clause; but in his reply the Chancellor did not seem at any time to be willing to weigh against revenue loss the damage done to our prestige and the whole future of our overseas business. Surely this is a case of give and take, but not apparently for the Government. They

say that whatever happens they must catch the transaction that avoids tax, no matter what damage that does to our general overseas business. It is this insensibility to the future of Britain in earning her bread and butter that makes me think there is nothing for it but to divide the House.

Question put, "That those words be there inserted in the Bill."

The House divided: Ayes, 268; Noes, 280.

Division No. 163]
AYES
[10.50 p.m.


Aitken, W. T.
Drayson, G. B.
Kaberry, D.


Alport, C. J. M.
Drewe, C.
Kerr, H. W. (Cambridge)


Amery, Julian (Preston, N.)
Dugdale, Maj. Sir Thomas (Richmond)
Kingsmill, Lt.-Col. W. H.


Amory, Heathcoat (Tiverton)
Duncan, Capt. J. A. L.
Lambert, Hon. G


Arbuthnot, John
Dunglass, Lord
Lancaster, Col. C. G


Ashton, H. (Chelmsford)
Duthie, W. S.
Langford-Holt, J.


Assheton, Rt. Hon. R. (Blackburn, W.)
Eccles, D. M.
Law, Rt. Hon. R. K.


Astor, Hon. M. L.
Elliot, Rt. Hon. W. E
Leather, E. H. C.


Baker, P. A. D.
Erroll, F. J.
Legge-Bourke, Maj. E. A. H.


Baldock, Lt.-Cmdr. J. M
Fisher, Nigel
Lennox-Boyd, A. T.


Banks, Col. C.
Fort, R.
Lindsay, Martin


Beamish, Maj. Tufton
Foster, John
Linstead, H. N.


Bell, R. M.
Fraser, Hon. Hugh (Stone)
Llewellyn, D.


Bennett, Dr. Reginald (Gosport)
Fraser, Sir I. (Morecambe &amp; Lonsdale)
Lloyd, Rt. Hn. G. (King's Norton)


Bennett, William (Woodside)
Fyfe, Rt. Hon. Sir David Maxwell
Lloyd, Maj. Guy (Renfrew, E.)


Bevins, J. R. (Liverpool, Toxteth)
Gage, C. H.
Lloyd, Selwyn (Wirral)


Birch, Nigel
Galbraith, Cmdr. T. D. (Pollok)
Lookwood, Lt.-Col. J. C.


Bishop, F. P.
Galbraith, T. G. D. (Hillhead)
Longden, Gilbert (Herts, S. W.)


Black, C. W.
Gammans, L. D.
Low, A. R. W.


Boles, Lt.-Col. D. C. (Wells)
Garner-Evans, E. H. (Denbigh)
Lucas, Sir Jocelyn (Portsmouth, S.)


Bossom, A. C.
Gates, Maj. E. E.
Lucas, P. B. (Brentford)


Boyd-Carpenter, J. A
Glyn, Sir Ralph
Lucas-Tooth, Sir Hugh


Boyle, Sir Edward
Gomme-Duncan, Col. A.
McAdden, S. J.


Bracken, Rt. Hon B
Gridley, Sir Arnold
McCorquodale, Rt. Hon. M. S.


Braine, B. R.
Grimond, J.
Macdonald, A. J. F. (Roxburgh)


Braithwaite, Sir Albert (Harrow, W.)
Grimston, Hon. John (St. Albans)
Macdonald, Sir Peter (I. of Wight)


Braithwaite, Lt.-Cdr. G. (Bristol, N.W.)
Grimston, Robert (Westbury)
Mackeson, Brig. H. R.


Bromley-Davenport, Lt.-Col. W.
Harden, J. R. E.
McKie, J. H. (Galloway)


Brooke, Henry (Hampstead)
Hare, Hon. J. H (Woodbridge)
Maclay, Hon. John


Browne, Jack (Govan)
Harris, Frederic (Croydon, N.)
Maclean, Fitzroy


Buchan-Hepburn, P. G T.
Harris, Reader (Heston)
MacLeod, Iain (Enfield, W.)


Bullock, Capt. M.
Harvey, Air Codre. A. V. (Macclesfield)
MacLeod, John (Ross and Cromarty)


Bullus, Wing Commander E. E.
Harvey, Ian (Harrow, E.)
Macpherson, Major Niall (Dumfries)


Burden, F. A.
Harvie-Watt, Sir George
Maitland, Cmdr. J. W.


Butcher, H. W.
Hay, John
Manningham-Buller, R. E


Butler, Rt. Hn. R. A. (Saffron Walden)
Head, Brig. A. H
Marlowe, A. A. H.


Cart, Robert (Mitcham)
Heald, Lionel
Marples, A. E.


Carson, Hon. E.
Henderson, John (Cathcart)
Marshall, Douglas (Bodmin)


Channon, H.
Hicks-Beach, Maj. W. W.
Marshall, Sidney (Sutton)


Churchill, Rt. Hon. W. S.
Higgs, J. M C.
Maude, Angus (Ealing, S.)


Clarke, Col. Ralph (East Grinstead)
Hill, Dr. Charles (Luton)
Maude, John (Exeter)


Clarke, Brig. Terence (Portsmouth, W.)
Hill, Mrs. E. (Wythenshawe)
Maudling, R.


Conant, Maj. R. J. E.
Hinchingbrooke, Viscount
Medlicott, Brig. F.


Cooper, Sqn. Ldr. Albert (Iflord, S.)
Hirst, Geoffrey
Mellor, Sir John


Cooper-Key, E. M.
Holmes, Sir Stanley (Harwich)
Molson, A. H. E.


Corbett, Lt.-Col. Uvedale (Ludlow)
Hope, Lord John
Monckton, Sir Walter


Craddock, Beresford (Spelthorne)
Hopkinson, Henry
Morrison, John (Salisbury)


Cranborne, Viscount
Hornsby-Smith, Miss P.
Morrison, Rt. Hon. W. S (Cirencester)


Crookshank, Capt. Rt. Hon H. F. C
Horsbrugh, Rt. Hon. Florence
Mott-Radclyffe, C. E


Crouch, R. F.
Howard, Gerald (Cambridgeshire)
Nabarro, G.


Crowder, Capt John (Finchley)
Howard, Greville (St. Ives)
Nicholls, Harmar


Crowder, Petre (Ruislip—Northwood)
Hudson, Sir Austin (Lewisham, N.)
Nicholson, G.


Cundiff, F. W.
Hudson, Rt. Hon. Robert (Southport)
Noble, Cmdr. A. H. P


Cuthbert, W. N.
Hudson, W. R. A. (Hull, N.)
Nugent. G. R. H.


Darling, Sir William (Edinburgh, S.)
Hurd, A. R.
Nutting, Anthony


Davidson, Viscountess
Hutchinson, Geoffrey (Ilford, N.)
Oakshott, H. D.


Davies, Rt. Hon. C. (Montgomery)
Hutchison, Lt.-Com. Clark (E'b'rgh W.)
Odey, G. W.


Davies, Nigel (Epping)
Hutchison, Col. James (Glasgow)
O'Neill, Rt. Hon. Sir Hugh


de Chair, Somerset
Hyde, Lt.-Col. H. M.
Ormsby-Gore, Hon. W. D.


De la Bere, R.
Hylton-Foster, H. B.
Orr, Capt. L. P. S.


Deedes, W. F.
Jennings, R.
Orr-Ewing, Charles Ian (Hendon, N.)


Dodds-Parker, A. D.
Johnson, Howard (Kemptown)
Orr-Ewing, Ian I. (Weston-super Mare)


Donner, P. W.
Jones, A. (Hall Green)
Osborne, C.


Douglas-Hamilton, Lord Malcolm
Joynson-Hicks, Hon. L. W.
Perkins, W. R. D.




Peto, Brig. C. H. M
Smithers, Peter (Winchester)
Thorp, Brig. R. A. F.


Pickthorn, K.
Smithers, Sir Waldron (Orpington)
Tilney, John


Pitman, I. J.
Smyth, Brig. J. G. (Norwood)
Touche, G. C.


Powell, J. Enoch
Snadden, W McN
Turner, H. F. L.


Price, Henry (Lewisham, W.)
Soames, Capt. C.
Turton, R. H.


Prior-Palmer, Brig. O
Spearman, A. C. M.
Vane, W. M. F.


Profumo, J. D.
Spence, H. R (Aberdeenshire, W.)
Vosper, D. F.


Raikes, H. V.
Spens, Sir Patrick (Kensington, S.)
Wade, D. W.


Rayner, Brig R
Stanley, Capt. Hon. Richard (N. Fylde)
Wakefield, Edward (Derbyshire, W)


Redmayne, M.
Stevens, G. P.
Wakefield, Sir Wavell (Marylebone)


Remnant, Hon. P
Steward, W. A. (Woolwich, W.)
Walker-Smith, D. C.


Renton, D. L. M
Stewart, Henderson (Fife, E.)
Ward, Hon. George (Worcester)


Roberts, Emrys (Merioneth)
Stoddart-Scott, Col. M
Ward, Miss I. (Tynemouth)


Roberts, Maj. Peter (Heeley)
Storey, S.
Waterhouse, Capt. Rt. Hon. C


Robinson, Roland (Blackpool, S)
Strauss, Henry (Norwich, S)
Watkinson, H.


Robson-Brown, W.
Stuart, Rt. Hon. James (Moray)
Wheatley, Maj. M. J. (Poole)


Rodgers, John (Sevenoaks)
Summers, G. S.
White, Baker (Canterbury)


Roper, Sir Harold
Sutcliffe, H.
Williams, Charles (Torquay)


Ropner, Col. L.
Taylor, Charles (Eastbourne)
Williams, Gerald (Tonbridge)


Russell, R. S.
Taylor, William (Bradford, N.)
Williams, Sir Herbert (Croydon, E)


Ryder, Capt. R. E. D.
Teeling, W.
Wills, G.


Salter, Rt. Hon. Sir Arthur
Thomas, J. P. L. (Hereford)
Wilson, Geoffrey (Truro)


Sandys, Rt. Hon. D.
Thompson, Kenneth Pugh (Walton)
Winterton, Rt. Hon. Earl


Scott, Donald
Thompson, Lt.-Cmdr. R. (Croydon, W)
Wood, Hon. R.


Shepherd, William
Thorneycroft, Peter (Monmouth)



Smiles, Lt.-Col. Sir Walter
Thornton-Kemsley, Col. C. N.
TELLERS FOR THE AYES:




Mr. Studholme and Mr. Digby.




NOES


Acland, Sir Richard
Daines, P.
Hastings, S.


Adams, Richard
Dalton, Rt. Hon. H.
Hayman, F. H.


Albu, A. H.
Darling, George (Hillsborough)
Henderson, Rt. Hon. A. (Rowley Regis)


Allen, Arthur (Bosworth)
Davies, A. Edward (Stoke, N.)
Hewitson, Capt. M


Allen, Scholefield (Crewe)
Davies, Ernest (Enfield, E.)
Hobson, C. R.


Anderson, Alexander (Motherwell)
Davies, Harold (Leek)
Holman, P.


Anderson, Frank (Whitehaven)
Davies, Stephen (Merthyr)
Holmes, Horace (Hemsworth)


Attlee, Rt. Hon. C. R.
de Freitas, Geoffrey
Houghton, D.


Awbery, S. S.
Deer, G.
Hoy, J.


Ayles, W. H.
Diamond, J.
Hubbard, T


Bacon, Miss Alice
Dodds, N. N.
Hudson, James (Ealing, N)


Baird, J.
Donnelly, D
Hughes, Emrys (S Ayrshire)


Balfour, A.
Dugdale, Rt. Hon. John (W Bromwich)
Hughes, Hector (Aberdeen, N.)


Barnes, Rt. Hon. A. J.
Dye, S.
Hynd, H. (Accrington)


Bartley, P.
Ede, Rt. Hon. J. C
Hynd, J. B. (Attercliffe)


Bellenger, Rt. Hon. F. J.
Edelman, M.
Irvine, A. J. (Edge Hill)


Benn, Wedgwood
Edwards, John (Brighouse)
Irving, W. J. (Wood Green)


Benson, G.
Edwards, Rt. Hon. Ness (Caerphilly)
Isaacs, Rt. Hon. G. A.


Beswick, F.
Edwards, W J. (Stepney)
Janner, B.


Bing, G. H. C.
Evans, Albert (Islington, S.W.)
Jay, D. P. T.


Blenkinsop, A.
Evans, Edward (Lowestoft)
Jeger, George (Goole)


Blyton, W. R.
Evans, Stanley (Wednesbury)
Jeger, Dr. Santo (St. Pancras, S.)


Boardman, H
Ewart, R.
Jenkins, R. H.


Booth, A.
Fernyhough, E.
Johnson, James (Rugby)


Bottomley, A. G
Field, Capt. W J.
Johnston. Douglas (Paisley)


Bowden, H. W.
Fletcher, Eric (Islington, E)
Jones, David (Hartlepool)


Bowles, F. G. (Nuneaton)
Follick, M.
Jones, Fredrick Elwyn (West Ham, S.)


Braddock, Mrs. Elizabeth
Foot, M. M
Jones, Jack (Rotherham)


Brook, Dryden (Halifax)
Fraser, Thomas (Hamilton)
Jones, William Elwyn (Conway)


Brooks, T. J. (Normanton)
Freeman, John (Watford)
Keenan, W


Broughton, Dr. A. D. D
Freeman, Peter (Newport)
Kenyon, C.


Brown, Thomas (Ince)
Gaitskell, Rt. Hon. H. T. N.
Key, Rt. Hon C. W


Burke, W. A.
Ganley, Mrs. C. S
King, Dr. H. M.


Burton, Miss E.
Gibson, C. W.
Kinghorn, Sqn. Ldr E


Butler, Herbert (Hackney, S.)
Gilzean, A.
Kinley, J


Callaghan, L. J.
Glanville, James (Consett)
Lang, Gordon


Carmichael, J.
Gooch, E. G.
Lee Frederick (Newton)


Castle, Mrs. B A.
Greenwood, Anthony (Rossendale)
Lee, Miss Jennis (Cannock)


Champion, A. J.
Greenwood, Rt. Hon. Arthur (Wakefield)
Lever Harold (Cheetham)


Chetwynd, G. R
Grenfell, Rt. Hon. D. R.
Lever, Leslie (Ardwick)


Clunie, J.
Grey, C. F.
Lewis, Arthur (West Ham, N)


Cocks, F. S.
Griffiths, David (Rother Valley)
Lewis, John (Bolton, W.)




Lindgren G. S.


Coldrick, W.
Griffiths, Rt. Hon. James (Llanelly)
Lipton, Lt.-Col. M


Collick, P.
Griffiths, W. (Manchester Exchange)
Logan, D. G.


Cook, T. F.
Gunter, R. J.
Longden Fred (small Heath)


Cooper, Geoffrey (Middlesbrough, W.)
Haire, John E. (Wycombe)
McAllister, G.


Cooper, John (Deptford)
Hale, Joseph (Rochdale)
MacColl, J. E.


Corbet, Mrs. Freda (Peckham)
Hale, Leslie (Oldham, W.)
McGhee, H. G


Cove, W. G.
Hall, Rt. Hon. Glenvil (Colne Valley)
McGovern, J


Craddock, George (Bradford, S.)
Hall, John (Gateshead, W.)
McInnes, J.


Crawley, A.
Hamilton, W. W.
Mack, J. D.


Crosland, C. A. R.
Hannan, W.
McKay, John (Wallsend)


Crossman, R. H. S.
Hardy, E. A.
Mackay, R. W. G. (Reading, N)


Cullen, Mrs A.
Hargreaves, A
McLeavy, F.







MacMillan, Malcolm (Western Isles)
Price, Joseph T. (Westhoughton)
Thomas, Ivor Owan (Wrekin)


McNeil, Rt. Hon. H.
Price, Philips (Gloucestershire, W)
Thorneycroft, Harry (Clayton)


MacPherson, Malcolm (Stirling)
Proctor, W. T.
Thurtle, Ernest


Mainwaring, W. H.
Pryde, D. J.
Timmons, J.


Mallalieu, E. L (Brigg)
Pursey, Cmdr. H.
Tomney, F.


Mallalieu, J. P. W (Huddersfield. E)
Rankin, J.
Turner-Samuels, M.


Mann, Mrs Jean
Rees, Mrs. D.
Ungoed-Thomas, Sir Lynn


Manuel, A. C.
Reeves, J.
Usborne, H.


Marquand, Rt. Hon. H. A
Reid, Thomas (Swindon)
Vernon, W. F.


Mathers, Rt. Hon. G
Reid, William (Camlachie)
Viant, S P.


Mayhew, C. P.
Richards, R.
Wallace, H. W


Mellish, R. J.
Robens, Rt. Hon. A.
Watkins, T. E.


Messer, F.
Roberts, Goronwy (Caernarvonshire)
Webb, Rt. Hon. M (Bradford, C.)


Middleton, Mrs. L.
Robertson, J. J. (Berwick)
Weitzman, D


Mikardo, Ian.
Robinson, Kenneth (St. Pancras, N.)
Wells, Percy (Faversham)


Mitchison, G R
Rogers, George (Kensington, N.)
Wells, William (Walsall)


Moeran, E. W
Royle, C.
West, D. G.


Monslow, W
Shinwell, Rt. Hon. E.
Wheatley Rt. Hn John (Edinb'gh, E.)


Moody, A S
Shurmer, P. L. E.
White, Mrs. Eirena (E. Flint)


Morgan, Dr. H. B.
Silverman, Julius (Erdington)
White Henry (Derbyshire N E)


Morley, R.
Silverman, Sydney (Nelson)
Whiteley, Rt. Hon. W


Morris, Percy (Swansea, W)
Simmons, C. J.
Wigg, G.


Mort, D. L.
Slater, J.
Wilcock, Group Capt. C A. B


Moyle, A.
Smith, Ellis (Stoke, S.)
Wilkins W. A.


Mulley, F. W.
Smith, Norman (Nottingham. S.)
Willey Frederick (Sunderland)


Nally, W.
Snow, J. W
Willey, Octavius (Cleveland)


Neal, Harold (Bolsover)
Sorensen, R. W.
Williams, David (Neath)


Oldfield, W. H.
Soskice, Rt. Hon. Sir Frank
Williams Rev. Llywelyn (Abertillery)


Oliver, G. H.
Sparks, J A
Williams, Ronald (Wigan)


Orbach, M.
Steele, T.
Williams, Rt. Hon. Thomas (Don V'lly)


Padley, W. E
Stewart, Michael (Fulham, E.)
Williams, W. T. (Hammersmith, S.)


Paget, R. T.
Strachey, Rt. Hon. J.
Wilson, Rt. Hon. Harold (Huyton)


Paling, Rt. Hon. W (Dearne Valley)
Strauss, Rt. Hon. George (Vauxhall)
Winterbottom, Ian (Nottingham, C.)


Panned, T. C
Stross, Dr. Barnett



Pargiter, G. A
Sylvester, G. O.
Winterbottom, Richard (Brightside)


Parker, J.
Taylor, Bernard (Mansfield)
Wyatt, W. L


Paton, J.
Taylor, Robert (Morpeth)
Yates, V. F.


Pearson, A
Thomas, David (Aberdare)
Younger, Rt. Hon. K


Peart, T. F.
Thomas, George (Cardiff)



Porter, G.
Thomas, Iorwerth (Rhondda, W.)
TELLERS FOR THE NOES:




Mr. Popplewell and Mr. Delargy

Mr. Gaitskell: I beg to move, in page 25, line 15, to leave out "Provided that— (i)," and to insert "(2)."
This, and the following Amendment, are both consequential on later Amendments.

Amendment agreed to.

(3) Nothing in the said paragraph (c) shall apply to the giving by the body corporate not resident in the United Kingdom to an insurance company of any security for the payment of any sum due or to become due from that body corporate to that company by reason of any transaction entered into with that body corporate by that company in the ordinary course of that company's business by way of investment of its funds.



(4) Any consent granted by the Treasury under this section—



(a) may be given either specially (that is to say, so as to apply only to specified transactions of or relating to a specified body corporate) or generally (that is to say, so as not only to apply as aforesaid); and



(b) may, if given generally, be revoked by the Treasury; and



(c) may in any case be absolute or conditional; and



(d) shall be published in such a way as, in the opinion of the Treasury, to give any person entitled to the benefit of it an adequate opportunity of getting to know of it unless in their opinion publication is not necessary for that purpose.

11.0 p.m.

This is the Amendment to which I referred when we were discussing the Opposition Amendment a moment or two ago. It fulfils the undertaking I gave in Committee to provide that the Treasury may give consent, either specially or generally, for certain transactions or classes of transactions to take place. We have also taken the opportunity, in the

Further Amendment made:

In line 16, leave out "this subsection," and insert "subsection (1) of this section." —[Mr. Gaitskell.]

Mr. Gaitskell: I beg to move, in page 25, line 22, to leave out from "bankers," to the end of line 26, and to insert:

new subsection (3), of excluding from the Clause altogether the issue of security to insurance companies in the same way as we have already excluded the issue of security to banks in the ordinary course of their business. I do not think that I need add anything more, except to point out that we attach considerable importance to the general consents which can be given and which means that once a


general class of transaction has been covered by the consents, it will not be necessary to come to the Treasury for permission.

Mr. H. Strauss: I wish to ask the Chancellor, or whoever is going to answer, for a little more information on what the right hon. Gentleman considers he will be at liberty to do under the power of "giving a consent generally." On the Committee stage of the Bill, he himself referred to the powers that he is now taking as "a dispensing power "—a rather ominous phrase in our constitutional history. He seeks the right to exercise these dispensing powers by a consent granted generally.
Now, the question which I wish to put is this; is it his intention that he shall be absolutely unfettered in the exercise of that general power of dispensing, and that he shall be under no obligation of any kind to secure equity as between one class of company and another? That is to say, that he will be perfectly free, under his general dispensing power, to give advantages to bodies corporate not already resident in this country without giving any corresponding advantages to bodies corporate which are already resident in this country?
The matter is of considerable importance, for I would remind him of what he said of this power as recently as 12th June. Replying to my right hon. Friend the Member for Aldershot (Mr. Lyttelton), the Chancellor said:
The right hon. Gentleman made a good deal of play with the deterrent effect the Clause would have on companies coming here. I think that is a fair point, and I do not see why we should not say, as we do in the case of some foreign investment today, If you come here from abroad to set up a business with substantial foreign capital, we are prepared to exempt such companies'."—[OFFICIAL REPORT, 12th June, 1951; Vol. 488, c. 2203–4.]
The question which I put is this: would the Government be able, under this Amendment which the Chancellor now moves, to exempt such companies as are not yet resident in the United Kingdom without giving the same powers and advantages to companies already resident in the United Kingdom? If that is the power which he is taking, and this the way in which he is going to exercise it, he will do an even greater injury to British credit than he has already done by this Clause.

Mr. C. Williams: May we have an answer to the point made by my hon. and learned Friend? Furthermore, could we be told what is meant by,
may, if given generally, be revoked by the Treasury
and also be given some information on paragraph (c), which says,
may in any case be absolute or conditional.
I have no doubt that one could find these words in some other Acts, but that is no reason they should be inserted in the Finance Bill this year. I definitely object to the transfer which is being represented here, and I very much regret the Treasury having control. I resent that they can give and take away in this sort of way and that they may revoke orders. The Chancellor of the Exchequer should tell us clearly under what conditions they are likely to revoke and to use paragraph (c). That will lead to a very great abuse which is hardly likely to be good for international trade.

Mr. Gaitskell: I think there is no doubt at all that we would have the power under this Clause to do what the hon. and learned Member suggested. Whether we should do it and in what form, I cannot say now. We have in mind precisely the same conception, the same idea, as the hon. and learned Member himself has in another Amendment which I think is not being selected. We should try and take care of the problem that is created in this way through the Amendment that I have just moved. As to the powers of revocation and why they would be required, they would be required if a general consent were given and then it were found that it involved a great deal of tax avoidance we might necessarily have to revoke it and replace it by something more narrowly drawn.

Mr. H. Strauss: May I ask the right hon. Gentleman just this question, so as to make certain that I understood him correctly? He says he will not exercise the power of giving a general licence in such a way as to differentiate between bodies corporate nor already resident in this country and other bodies corporate?

Mr. Gaitskell: No, I did not intend to give that impression at all. I said we did not wish to use it in any way unfairly. I think it is perfectly reasonable to use it in a way to encourage or avoid deterring foreign capital from coming into this country.
Question, "That the words proposed to be left out stand part of the Bill," put, and negatived.
Question proposed, "That the proposed words be there inserted in the Bill."

Mr. H. Strauss: I beg to move, as an Amendment to the proposed Amendment, in line 12, to leave out, "in the opinion of the Treasury."
It would be convenient to discuss this Amendment and the next Amendment to leave out line 14 together. Subsection (4) (d), of the Chancellor's Amendment, deals with publication, and states that any consent granted by the Treasury under this section
shall be published in such a way as, in the opinion of the Treasury, to give any person entitled to the benefit of it an adequate opportunity of getting to know of it, unless in their opinion publication is not necessary for that purpose.
I propose to leave out the words, "in the opinion of the Treasury," and the words, "unless in their opinion publication is not necessary for that purpose." The effect of my two amendments taken together is that publication would be obligatory in such a way as to give persons entitled to the benefit an adequate opportunity of getting to know of it. That seems reasonable. I cannot see that the matter should be left wholly to the discretion and opinion of the Treasury.

Mr. Boyd-Carpenter: I beg to second the Amendment to the proposed Amendment.
The Chancellor has made very clear his view of the importance attached to these consents. It surely does follow that it is very important that everybody concerned should have a real opportunity to know of them, and that that should not be dependent upon the Treasury's opinion.

Mr. Hylton-Foster: The more you go on conferring discretion on the Executive, the less you get a proper rule of law. The truth is that either this publication is adequate for the purpose that the House wants or it is not. If it is not, you do not make the Treasury goose into a public swan by putting in "in the opinion of the Treasury."

The Attorney-General: I should be quite prepared to accept the first of the

two Amendments, but there is a very serious danger in accepting the second for the following reason. The Amendment that my right hon. Friend has just moved referred both to general and special consents. It would be really most undesirable if a consent which affects a particular company had to be published. It is essential to retain a discretion as to whether a particular consent, at any rate, is published.
I would propose that the House should certainly accept the first of the two Amendments: that is to say, to leave out the words, "in the opinion of the Treasury." That removes any discretion from that part of the Clause. But the second Amendment should be rejected, although it would be necessary, if the first Amendment is accepted, for a manuscript change to be made in line 14. I suggest that paragraph (d) should read:
shall be entitled in such a way as to give any person entitled to the benefit of it an adequate opportunity to know of it, unless, in the opinion of the Treasury, publication is not necessary for the purpose.
The effect of that would be that all consents of a general character must be published in an adequate form, and that the Treasury's opinion does not enter into that part of the publication. So far as any special consents are concerned, the Treasury would have the discretion not to publish at all, but simply to communicate it to the particular persons affected. I would recommend the House to accept the first Amendment, and if you, Mr. Deputy-Speaker, would allow me to move a manuscript Amendment, I should like to do so. It would be in line 14—

Mr. Deputy-Speaker (Colonel Sir Charles MacAndrew): Perhaps this Amendment could be moved after we have got rid of the first one.

The Attorney-General: In those circumstances, I accept the first Amendment.

Mr. J. Foster: Is there not the same objection to the Attorney-General's suggestion that the Treasury should be left with discretion about publication where special consents are concerned? The same objection applies to each Amendment. Surely the Attorney-General can see that there is no reason to give the Treasury a discretion about the publication of special consents, any more than about the other consents.

Mr. Pickthorn: I should like to ask two small points. First, I think that in the Attorney-General's last paragraph but one, when he said "entitled", he meant "published". Perhaps we had better get that right. Secondly—I apologise, here, if I am just being stupid—am I right in thinking that "general" really means a consent to any more than one company?—Because it seems to me that the argument about paragraph (d) is rather a different one, according as one is quite clear about that. Is it right to assume that any consent for more than one company is general within the purpose of this subsection?

11.15 p.m.

The Attorney-General: I speak again by leave of the House. If the hon. Gentleman will look at subsection (4), he will see that the consents are so defined. With regard to the point made by the hon. and learned Member for Norwich, South (Mr. H. Strauss), it seems to us that it is really going too far to take away any element of discretion. It seems to us that it is sensible to say that it should be for the Treasury to say whether they think in any particular case it should be published or not.
As the consent affects only a particular company they might do a great deal of harm by disclosing confidential information supplied by the company, and they should in a case like that exercise their discretion. Bona fide discretion would have to be exercised as to whether they published it at all. I agree that in a sense it is a matter of wording, and that if you say "in the opinion of the Treassury", it does not add very much except to make it clear that it is for the Treasury, but I hope the House will decide that the words should be left in so that they can decide whether it should be made public.

Mr. H. Strauss: With the leave of the House, I should like to say that, since the main object has been achieved, and in order to facilitate progress, I do not intend to move the second Amendment.

Amendment to the proposed Amendment agreed to.

The Attorney-General: I beg to move, as an Amendment to the proposed Amendment in line 14, to leave out "their opinion," and to insert:
the opinion of the Treasury.

Amendment to the proposed Amendment agreed to.

Proposed words, as amended, there inserted in the Bill.

Colonel J. R. H. Hutchison: I beg to move, in page 25, line 22, at the end, to insert:
(ii) Nothing in this section shall apply to any action undertaken to comply with any requirement of an overseas government or authority.
This Amendment does not need much argument. As a good wine needs no bush, so a good Amendment is self-evident. The Chancellor laid great stress on the power to grant general consent under subsection (4) of his Amendment, and it seems to us that this is a class of transaction to which general assent can and should be safely given in advance. It is hard to see how consent can be objected to; otherwise what a desperate dilemma some unfortunate concerns will be in.
Here certain action is required by the laws of the country in which its subsidiary operates which may result in a loss of tax in this country. But if the Treasury consent is not granted, then it would offend against the laws of the country, or even against the laws of this country. It is truly between the devil of the Treasury and the deep blue sea of the foreign country's legislation. This is not imaginary. There are certain circumstances which may crop up, and action taken by some Governments in certain countries points a finger to the sort of thing I have in mind.

Mr. Heathcoat Amory: I beg to second the Amendment.

Mr. Gaitskell: I can understand the motives of the hon. and gallant Gentleman in moving this Amendment. I say at once that where pressure of this kind occurs on a company we should certainly bear that in mind, and I have no doubt Treasury consent would be forthcoming. But the Amendment as it stands is open, as I think, to two fatal objections. In the first place, it is extremely widely drawn and will allow any company to claim to be excluded from the Clause simply by saying it was the wish of the Government in such-and-such a territory that they should do this. It would be practically impossible to refuse an excuse of this kind.
Secondly, I think it would be an open invitation to overseas Governments to make all sorts of provisions which might be by no means welcome to a number of companies. Although we appreciate this problem, which, indeed, was one of the main considerations we had in mind when we decided to introduce the special arrangements for consents, I am afraid I cannot accept the Amendment.

Colonel Hutchison: I suppose we shall have to be satisfied with a somewhat unsatisfactory assurance. I am dissatisfied to have to rely on the Treasury granting consent along the lines the right hon. Gentleman has indicated.

Mr. Deputy-Speaker: The hon. and gallant Member must ask leave of the House to speak again.

Colonel Hutchison: May I, with the leave of the House—

An Hon. Member: Object.

Mr. Eccles: The Chancellor's answer just shows what an impossible Clause this is. I am inclined to agree with him that if the Amendment were inserted it would be an invitation to directors and foreign Governments to bring forward all kinds of unwelcome proposals. But that leaves us in the position that there are bound to be clashes between His Majesty's Government and overseas Governments.
The Chancellor dare not put the Amendment in for fear that that would tempt foreign Governments to make conditions that would not be in our interest. On the other hand, if he does not accept the Amendment, then it means that only after the foreign Governments have made such conditions can it be known whether His Majesty's Government are going to object to them. The Clause is a breeder of diplomatic trouble. I should have thought that the very difficulty posed by the Amendment shows that the whole Clause ought to be taken away.

Mr. John Foster: One of the arguments used by the Chancellor was that this Amendment was an invitation to foreign Governments and authorities to require English companies to do things which might prove awkward. Surely he can see this Amendment is not such an invitation. If the governments are going to do anything, they will do it

anyway. They will do it without the Amendment and without the Clause being there. It cannot be said that an Amendment which exempts companies from the requirements of Clause 33 is an invitation to other Governments and authorities to make these requirements. I ask the right hon. Gentleman to reconsider his attitude about this, because it is going to be awkward if a Government or authority abroad makes a requirement, which they could have made irrespective of the existence of Clause 33, and then, as my hon. Friend has said, it is found that the company is between the requirements of Clause 33 and the requirements of the foreign Government.

Sir J. Mellor: I think the Chancellor of the Exchequer's attitude in this matter is characteristic of his attitude to the whole question. He does not seem to care a bit what embarrassing and awkward position he puts a company into provided he can stop up all the gaps. He seems to have lost all sense of proportion. He is so horrified that by some ingenious device some company may sneak through the fence that he is, so far as I can see, willing to sacrifice British trade.
This sort of thing is going to have the most embarrassing effect. The Chancellor refuses the reasonable proposal which has been put forward, but he is not prepared to criticise it or to say that it can be improved, or to say that he thinks he can make it a reasonable proposition. He does not do that; but says that it cannot be accepted because it may possibly open a gap. If he is going to deal with the matter like that, then I can foresee, whatever may be done by way of consent, that British trade is going to be greatly embarrassed by what is contemplated by this Amendment. If some foreign government takes action a company will be in difficulty: any consent will be delayed and the company will be penalised. I do not think that the Chancellor is being reasonable, and therefore I should like to see this Amendment pressed to a Division.

Amendment negatived.

11.30 p.m.

Mr. Gaitskell: I beg to move, in page 26, to leave out lines 29 to 35, and to insert:
(6) Notwithstanding anything in the preceding provisions of this section, in no event shall a mere transfer of assets by a body corporate not resulting in a substantial change in the character or extent of the trade or business


of that body corporate be treated for the purpose of this section as a transfer of part of the trade or business thereof.
This Amendment has been put down to fulfil an undertaking given during the Committee stage in dealing with an Amendment moved, I think, by the hon. Member for Chippenham (Mr. Eccles). It makes plain that the Clause is not intended, and ought not, of course, to affect cases where there is a mere transfer of assets. Mining leases was the principal illustration given by the hon. Member. Cases of that kind are not affected. So that there shall be no doubt, we have put these words into the Bill.

Mr. Eccles: I should like to thank the Chancellor for meeting us to this extent. I have only one observation to make on the Amendment. That is, that we still do not quite know where we are, because no one can be quite clear about what is meant by "a substantial change in the character or extent of the trade or business." I thought, from the Committee stage debate, that the Chancellor of the Exchequer would be willing to say that any transfer of assets which did not result in changing the residence of the company would be a definition of a substantial change. I should like to ask the Government whether that is not really what they mean. Can they really think of any transfers which fall short of altering the place where the company is controlled to which they would object?

Mr. Gaitskell: I should have thought it was perfectly possible that one could have a major part of the assets overseas without involving a transfer of the business and without the residence itself being transferred.

Amendment agreed to.

The Attorney-General: I beg to move, in page 26, line 42, to leave out from "control," to the end of line 44, and to insert:
means, in relation to a body corporate, the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other body corporate, or by virtue of any powers conferred by the articles of association or other document regulating that or any other body corporate, that the affairs of the first-mentioned body corporate are conducted in accordance with the wishes of that person.
This is purely a drafting Amendment. It is in order to avoid referential legislation,

and it embodies a description of control by a body corporate.

Mr. Manningham-Buller: I thank the Attorney-General for moving this Amendment. We moved an Amendment in almost precisely the same terms during the Committee stage. Comparing the two Amendments, the only difference is the insertion in the present Amendment of the words, "in relation to a body corporate". I am grateful to the Attorney-General for accepting our suggestions, which will lead to yet further improvement of the Bill.

Amendment agreed to.

The Attorney-General: I beg to move, in page 26, line 46, at the end, to insert:
'insurance company' means a body corporate lawfully carrying on business as an insurer, whether in the United Kingdom or elsewhere, and 'funds' in relation to an insurance company means the funds held by it in connection with that business,
and a body corporate shall not he deemed for the purposes of this section to cease to he resident in the United Kingdom by reason only that it ceases to exist.
This is purely consequential on what has gone before in defining an insurance company, and it is also designed to remove doubt about whether a company, by going into liquidation and being finally wound up and struck off the roll of companies, could be said to be ceasing to be resident here. It provides that it should not.

Mr. Manningham-Buller: I should again like to say "Thank you" to the Attorney-General for this Amendment.

Amendment agreed to.

The Attorney-General: I beg to move, in page 26, line 46, at the end, to insert:
No proceedings for an offence under this section shall be instituted, in England or Wales, except by or with the consent of the Attorney-General or, in Northern Ireland, except by or with the consent of the Attorney-General for Northern Ireland:
Provided that this subsection shall not prevent the issue or execution of a warrant for the arrest of any person in respect of such an offence, or the remanding in custody or on bail of any person charged with such an offence.
This Amendment provides that prosecutions under the Clause shall not take place except with the consent of the Attorney-General. A similar Amendment appears on the Order Paper in the name of the hon. and learned Member for


Northants, South (Mr. Manningham-Buller)—in page 26, line 46, at the end, to insert:
(7) A prosecution for an offence under this section shall not be instituted except by or with the consent of the Attorney-General:
Provided that a person charged with such an offence may be arrested, or a warrant for his arrest may be issued and executed, and any such person may be remanded in custody or on trial, notwithstanding that the consent of the Attorney-General to the institution of a prosecution for the offence has not been obtained but no further or other proceedings shall he taken until that consent has been obtained.
We have adopted the thought behind that Amendment, which has certain drafting difficulties that I do not think the House will want me to go into now.

Mr. Manningham-Buller: For the third time I should like to say, "Thank you." I am sorry the Attorney-General should have been so critical of our attempt at drafting this provision. We had a good precedent from an earlier Act, but I think his drafting is entirely satisfactory and fully carries out our intention.

The Attorney-General: The hon. and learned Member adopted the precedent, but unfortunately he adopted only half of it. He did not also adopt the definition Clause.

Colonel Gomme-Duncan: Does this provision mean that anybody can institute proceedings in Scotland?

The Attorney-General: In Scotland they would have to have the consent of the Lord Advocate.

Colonel Gomme-Duncan: Would it not have been better to put that in the Clause?

Amendment agreed to.

Clause 34.—(SALES, ETC., BETWEEN ASSOCIATED PERSONS.)

Mr. Selwyn Lloyd: I beg to move, in page 27, line 8, at the end, to insert:
and
(c) the price at which the property is sold is not reasonable in all the circumstances.
We have now come to an Amendment to an extremely important Clause which was hardly considered at all during the Committee stage. All we had from the Government with regard to this Clause was about one and a half columns in

HANSARD from the Attorney-General. I submit to the right hon. and learned Gentleman that this is not really a legal matter at all. It is a Clause which affects a great deal of our trade and our commerce and our industrial undertakings with subsidiaries overseas.
As hon. Members will be aware, the Clause deals with sales between associated persons and, after defining those associated persons, it goes on to state that if the transaction takes place at a price
less than the price which it might have been expected to fetch if the parties to the transaction had been independent persons dealing at arm's length, then, in computing the income, profits or losses of the seller for income tax and profits tax purposes, the like consequences shall ensue as would have ensued if the property had been sold for the price which it would have fetched if the transaction had been a transaction between independent persons …
dealing at arm's length. That is the general purport of the Clause.
I gather that the object of the Clause is to catch some cases where, for deliberate purposes of tax evasion or tax avoidance, transactions have been artificially altered so as to achieve that purpose. I imagine it is not intended to bring within the compass of this Clause ordinary commercial transactions. If that is the case, it seems to me a great pity that the Government have not sought to define in more precise terms what they are seeking to hit. Far from a sprat to catch a mackerel, here they have thrown in a whale to catch a sprat. The difficulty and danger involved in this Clause are very great indeed to employment and trade in this country.
The Amendment I am moving seeks to insert a qualification. In other words, it seeks to say that the only circumstances in which the Treasury or the Revenue Department can interfere with these transactions is if the price at which they are conducted is
… not reasonable in all the circumstances.
I should have thought that that was a very moderate means of attempting to improve what I consider to be a bad Clause. In other words, it is only if the transaction takes place at an unreasonable price that the Revenue can readjust it in the way described.
The reason why we seek to make that alteration is this. There are two practical consequences to the Government's


proposal. The first is an administrative one. I heard the other day of a case of a company which carries on, with one of its subsidiaries, something like 300 transactions a day. Is it seriously to be expected that the Revenue will re-assess each of those transactions as if they had been transactions between persons dealing at arm's length? Where will the staff come from? How can it be done without a great deal of time and trouble and inconvenience and without involving the company in setting up its own sub-department to deal with the Revenue over the resettlement or readjustment of these transactions? In that class of case it is an administrative absurdity to seek to put a Clause like this before the House.
The other class of case is where a company in this country is part of a group of companies perhaps with its parent company in America and subsidiaries in the Dominions and foreign countries. I gave an example of a large concern with an American parent company and subsidiaries in this country and in various other countries. Everything has been on a cost basis between the various groups of companies, and that involves the company in this country getting materials and prototypes and such things at cost price—this was very beneficial to this country as the transactions were in dollars—and then its products went to the other subsidiaries at cost price. That gave employment to the company in this country.
If the Clause retains the effect which it has at present, the work will not come to the subsidiary in this country but will go straight from the parent company in America to the subsidiaries in other countries. The group will not stand for the administrative complications of having all these transactions reassessed and readjusted, and work and employment will be lost to the company concerned and to its workpeople in this country. Surely the Government cannot desire that sort of thing to happen.
I believe that the two instances which I have given can be multiplied many times. It seems utterly wrong, in order to catch an occasional case of deliberate tax evasion, to add this Clause which will catch all types of transactions of the nature described however much they may be bona fide, however much they may be in the ordinary course of business

and however innocent they may be. It will do very serious damage to our trade and industry and employment in this country. It is a Clause which we had no chance of discussing in Committee except for a very short time in very general terms, and I beg the Attorney-General to accept the Amendment.
Even so, the Clause will remain a bad one, but it will be very much better and will provide some chance of giving an inducement to the companies concerned to retain their business and employment in this country, and it will do something to reduce the enormous administrative task which will fall on the parent companies in this country dealing with subsidiaries overseas. This is a theme which deserves treatment at much greater length because it is of very great importance, but as the hour is late I content myself with what I have said.

11.45 p.m.

Mr. Eccles: I beg to second the Amendment.
My hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) is perfectly right: the Clause is so bad that even with this Amendment it cannot be made a workable and satisfactory piece of legislation. When one thinks what an enormous number of transactions take place between firms inside this country and associated firms outside this country, the proportion of those transactions which are done for the purpose of avoiding tax must be infinitely less than one per thousand. Why did not the Government state exactly what kind of transaction they were after and draft a Clause to catch that kind of transaction?
We were brought up on the old doctrine that if one of the sheep strayed from the fold the right thing to do was to drop everything else and go out after him and bring him home. But modern Socialism completely reverses the ancient doctrine. The practice of right hon. Gentlemen opposite is to punish the 99 good sheep simply in order to try to catch the one black deviationist.
This is thoroughly bad for the conduct of British business. I believe that the only class of transaction the Government are after is the one-man property company; the company where someone builds a house costing, say, £1,000 and then sells it to another company with which he is associated at cost price and,


after a short time, that other company sells it at a profit. If the buying company is allowed to treat it as a capital asset, no tax is payable on the profit when the house is finally sold. I believe that to be the only serious class of transaction aimed at by this enormous Clause which brings within its ambit every single sale between associated companies here and overseas.
Like my hon. and learned Friend, I should like to impress the seriousness of this upon the House by giving a number of examples, but the time is late. I want, therefore, to remind the House that my right hon. Friend the Member for Aldershot (Mr. Lyttelton) during the Committee stage, speaking from the experience of his own business, showed how exceedingly difficult it will be to say what exactly should be the arm's length price of, say, spare parts for heavy electrical machinery which he is supplying to India and other markets.
It is not possible for the Treasury to set up as a judge of what two associated companies should charge when one is making capital plant for another. Take the case of a company which makes lathes and is also interested in a number of garages. It makes a lathe for £100, the market price of which will be £150, but for reasons of inter-company structure it sells the lathe at cost price to one of le garages. What is to happen then? Is the Treasury to come along and revalue the price at which the manufacturing company made the lathe and say, "You ought to pay tax on £50," or would it put it at £35 or £40? It is an absurd Clause to have brought before this House.
I want to ask one final question of the Government. Whom did they consult in trade and industry before they put this Clause into the Bill? I wonder, for instance, did they go anywhere near the Dollar Export Board? What sort of advice did they get from people such as that board who are trying to establish British goods in a new market? Did they inquire how often a company sells goods cheap to its American subsidiary in order to find the dollars to pay for advertising when it is breaking into the American market? My information is that no sort of consultation with industry took place, and I wish to be corrected if I am wrong. But if that is so, it is serious.
I can only explain it in this way: the Government are run by civil servants. This Clause must have been brought into the Bill because the Revenue civil servants, looking at their departmental responsibilities through narrow blinkers, said, "You need this power in order to deal with certain cases, of which we are aware, where men have sold goods not at arm's length." From their narrow departmental point of view they may be right; I think that perhaps they are. But why have we Ministers? We have Ministers to point out that there are wider considerations; and throughout this Bill I have got the impression that the Government is being run by civil servants, with none of that Ministerial control necessary to keep experts in their place.

The Attorney-General: As both Members have said, this Clause was not very fully discussed during the Committee stage of the Bill, but that, I think, was by mutual consent of both sides. For that reason, right hon. and hon. Members may not be very fully aware of the purpose of the Clause, which really has to give effect from our point of view to provisions contained in our double taxation agreements.
These agreements go back to the League of Nations' Model Double Taxation Convention, which was made in 1945, and they are based on the outlines of that Convention. That model provides that the agreements entered into may enable one country, when one of its own nationals diverts profits to another country, to tax that national on those profits. When I say "diverts," perhaps I should explain to the House that I mean by that carrying out some transaction, or doing something as described in this Clause—sales to an overseas subsidiary at cost, or something of that sort.
Under these circumstances, instead of making a profit, as it would if it sold at the arm's length price, a company sells at cost and makes no profit. In that sense, it diverts profit to some other country; but under the double taxation agreements the country of residence of the national who diverts the profit can levy taxation on that profit. For example, in the case of our double taxation agreement with the United States, the latter may tax American companies which divert profit to this country; and so, it is perfectly reasonable that we, in a similar set of


circumstances, should be able to tax a company on the profits it diverts abroad.
The double taxation agreements were entered into under Section 51 of the Finance (No. 2) Act, 1945, and it was thought that they were within the four corners of that Section. But doubts arose as to whether that was so, and the Treasury was advised that Section 51 of that Act was inappropriate for the purpose. All that this Clause is really doing, and is designed to do, is to make the law what it was thought to be in respect of the double taxation agreements entered into.
Our double taxation agreements, I think in every case, contain in effect what this Clause now seeks to make law. Strictly speaking, it was unlawful before, and the Treasury has been advised to take this step. Our agreements enable each country to tax diverted profits, and that is all that this Clause does. It is mainly aimed to deal with the case where a British company diverts profits abroad. The way in which it does this is exactly as the League of Nations' Model Convention did, and the way in which our double taxation agreements operate. They simply say that the transaction is rewritten so as to take the shape it would have had supposing that the price had been one arrived at at arm's length.
Hon. Members say it is difficult to arrive at a price on that basis. In some circumstances, I frankly agree that it is difficult to do so, but it is more difficult to try and devise any other measure of price which would be more appropriate. Sometimes the word "market price" is used or something of that sort, but the conception sought to be embodied in the Clause is one of two companies or two persons who are negotiating at arm's length; that is to say, there are two independent companies not controlled or owned by each other and the arm's length price is one they would in normal circumstances arrive at.
What the Amendment seeks to do is to add to it a requirement that the price should be reasonable. What it really is doing, in seeking to do that is to add an uncertain test to a test which is certainly capable of precision. In most cases one can, looking at the transaction, say what would have been the price that these two companies would have fixed upon as

the appropriate price supposing they had been negotiating at arm's length.
If one says the price has to be reasonable as well, one is introducing a whole range of considerations as to what in given circumstances is reasonable. It is better to follow the model of the recent double taxation agreements which have given rise to no difficulty and have the precedent of the League of Nations' Model Convention; to follow that example which has worked perfectly well hitherto and which has no vice except this legal doubt which has been raised. It is better to do that than raise a new and uncertain test so that nobody knows where they stand. For these reasons, it is much the best to leave the Clause as it is.
We must have the Clause, since otherwise under the agreements we have with the United States, for example, they would be able to tax their nationals where profits were diverted away from them but we should not have the reciprocal advantage. That is a hopeless situation. It means the other countries with which we enter into agreements have an advantage over us, and we have no reciprocal advantage when the situation is reversed, with regard to them. I think that the double taxation agreements are desirable in themselves, I think that the House as a whole is in agreement that we must have as many of them as we can and must regularise the incidence of double taxation so far as we can throughout the world.

Mr. J. Foster: I understand what the right hon. and learned Gentleman is saying about the intention of the Clause, but does not the Clause go very much farther in what it does than what he indicates? Could he deal with what the proposer and the seconder of the Amendment have said about what the Clause says? Not only does it do what the Attorney-General says it does, namely, stops profits going abroad so that they can be taxed, but does it not also affect all the parent companies dealing with subsidiaries in England?

Mr. Eccles: Would the right hon. and learned Gentleman tell the House what the position of the maker of the lathe, which I quoted, is? Should he continue to sell at cost price, or must he sell at market price?

The Attorney-General: If I may, I will answer both these questions in order. Most of the cases are the cases of the parent company here and the subsidiary abroad. The Clause does not apply at all to companies which are taxed here under Schedule D. As would have been noticed, there is a proviso both to subsection (1) and to subsection (2) which takes out the case of two companies both resident here and both dealing in or transferring stock or something of that sort. If they are taxable in relation to that transfer under Schedule D, they are taken out. The hon. Member is disagreeing before I can give him his answer. It brings into its scope, and I do not see why it should not, the case of a company which is a holding company and which receives shares from a dealing company.
Suppose that we take the case of a company which deals in shares and controls a company which is a holding company, and it transfers shares in which it deals to the holding company. It would be taxed in relation to any profit it makes by that transfer under Schedule D. It is perfectly reasonable that if the shares are transferred at cost or below their market value, below their arm's length price, to the holding company, and the holding company then sells them later at a price above that and realises a capital profit, this Clause should apply.
12 midnight.
With regard to the question about the sale of lathes. This Clause really does not have much effect upon that, It is already dealt with by Section 59 of the 1945 Income Tax Act, which, in the case of a transfer of capital assets between companies provides for the rewriting of the transfer at the arm's length price for the purpose of the assesment, not only of the depreciation allowance, but of the balancing charge as well. So that one has to look to Section 59 of that Act to see what happens when inter-related companies transfer capital assets one to the other.
Clause 59, in fact, does almost exactly the same as this Clause does in relation to transfers within its scope. For that reason, I hope that the House will agree that this Clause is one we must have. We are bound under our double taxation agreements to give advantages, and if we have no legal right under the terms of our own legislation we cannot exact similar advantages when the position is

reversed. This Clause covers a limited class of transactions, when a company is selling to a holding company in this country. It does not affect the companies resident here that are taxed under Schedule D in respect of transfers.

Captain Crookshank: It has been my experience in the past that when we are getting to the end of the Report stage something quite incredible happens. This is one of those occasions. None of us ever wants to criticise or object to the right hon. and learned Gentleman speaking, or to the clarity of the speeches which he makes. But I should have thought that this was not a legal matter at all; it should have been explained to us in greater detail either by the Chancellor or by the Board of Trade, because of its general repercussions.
What is most extraordinary is that the Attorney-General has based his defence of this Clause and his opposition to this Amendment on an argument which has never been heard before in this connection. It is not as if the Clause had not been before the Committee at an earlier stage. Tonight he says that the Clause is based on a model clause of the League of Nations and that it is mixed up with the double taxation agreements; that this was thought to be lawful but there was found some error, and that this Clause is merely legalising something that was thought to be the law, and that without it we should be diverting profits to other countries. The Government are bound, he says, to have this Clause because otherwise it would give other countries advantages and we could not exact from those countries similar advantages here.
All this is very interesting. But, when the Attorney-General spoke to this Clause before, he started off by saying that it deals with a form of tax avoidance. I find what he says today hard to reconcile with the normal meaning of tax avoidance, as used in debates on this Bill.

The Attorney-General: It is not inconsistent.

Captain Crookshank: I should have thought it was. Why on earth did he not tell us about the League of Nations or double taxation relief before? I do not believe that he knows a word about it, and that all this happened between 13th June and 2nd July. Why did not


some one get up and tell us? It is no use those on the Treasury Bench wagging their heads. A great deal of anxiety would have been allayed if we had been told. But no, they did nothing of the sort, and I find it hard to accept this strange new story at this stage of the Bill.
My second objection to the Attorney-General's speech is when he says that by using the words "not reasonable in all the circumstances" a very uncertain test is brought in. In most cases, he said, one could easily tell by looking at the goods what the prices should be in terms of "arm's length prices." But the other night he did not say that at all. He said then:
… it is extremely difficult—to assess what is meant by arm's length prices'.
He also stated:
I certainly did not mean to convey the impression that it would be perfectly easy to arrive at a price which would conform to the formula.
And later in the same speech:
I am not saying that the application of this Clause in all cases will be one which does not raise fairly complicated problems."—[OFFIDAL REPORT, 13th June, 1951; Vol. 488, c. 2471–72.]
The Attorney-General has granted all that, and he has realised that to arrive at an arm's length decision is very difficult. Why then does he object to our Amendment, particularly if he will bear in mind the point which my hon. Friends made about the enormous number of transactions which will have to be upset by this?
Of course, if he is going to ride off on the League of Nations and double taxation relief argument and say that everything he said previously has nothing to do with the Clause, then I find myself in great difficulty in advising my hon. Friends. But I would suggest that they protest in the only possible way now that the Bill has reached this stage and it is too late to amend it. The Attorney-General, having come down with this explanation, we must protest against it, and if my hon. Friends press their Amendment I shall go into the Lobby with them.

Mr. Erroll: I wish to draw the attention of the Attorney-General to the completely impossible position into which he has put us. We were told this Clause was to meet tax avoidance by firms transferring property to subsidiaries abroad. Now we

are told it is merely designed to legalise a procedure arising out of former Acts. I can only say that in that case a large number of transactions have been taking place which have not been lawful, and if Section 59 of the 1945 Act is doing all that is now claimed for it, the Treasury has been extraordinarily remiss in its work. The fact is that the Clause as it stands without our Amendment, if it is worked fully at all, has to be worked as has been suggested, and if it is not to be worked as fully as it is at present, it is essential that this Amendment should be accepted, and other Amendments as well.
The Attorney-General has said that it is necessary to have a test capable of precision, and that the word "reasonable" is vague. But in transactions under this Clause there can be no precision. That is our point. I would urge Ministers opposite to realise that these transactions are not capable of that legal precision which the Attorney-General and his advisers think possible.

Sir Arnold Gridley: I happen to be interested in this question as the chairman of a holding company with a large number of subsidiary companies. I could understand the need for this Clause if, as the Attorney-General has explained, it were intended to deal with transactions between companies in this country and companies overseas, but it is not limited to that. It applies to companies which are doing inter-company business in this country.
If it is not too late, I should like to press the Chancellor to explain to us precisely how this Clause would be worked. So far as I can see, it is utterly impracticable, without giving the widest roving powers to officers of the Inland Revenue, who would probably waste a great deal of their own time and of the time of managers and accountants of companies who ought to be doing their bit in increasing the production which the country needs.
If a holding company has a group of subsidiaries all 100 per cent. owned, why is a Clause of this kind necessary for transactions between these subsidiaries? It would not matter what the prices were. If one company made a profit, the company supplying would presumably make a loss. It often happens that a company obtains control of another because it is


the only company equipped to provide essential elements which the parent company needs to develop a new type of machine. Who in the world is going to say what is the right price to charge for a product that has never been produced before when it is transferred to another company in the group? Those who have had actual experience of this see the absurdity of what the Government are trying to do here.
I think that some of the advisers of the Government have gone mad. This attempt to trap one or two people is going to put hundreds of others to unnecessary work and waste the time of Government officials and those carrying on productive industry. I do not know whether it is practical for the Chancellor to withdraw the Clause and submit another dealing with the control he wishes to apply to double taxation and leave out its effect on companies carrying on inter-trading in this country, but I put that suggestion to the Chancellor and hope he will see his way to look into it again.

12.15 a.m.

Mr. Drayson: Listening to the discussion on the Amendment, it occurs to me that it must give rise to considerable confusion in the textile industry, where there are a number of companies that are combined vertically. Companies

which spin the yarn, weave the cloth, finish it, make it up, and then do the merchanting and exporting overseas, are in one group.

In such a set-up, do the Government say they are going to decide the correct price at which a spinning company sells its yarn to the weaving company, or the correct price at which a weaving company sells its cloth to its subsidiary finishing company, whether the proper finishing charges are made by the finishing company and are passed to the next which is handling the material, whether the making up charge charged to a separate subsidiary which deals with making up is correct, or whether favourable terms are given to the subsidiary or the ultimate merchanting company?

I think that the Chancellor of the Exchequer, or the Attorney-General, if he will consider the possible complications which will arise in any vertical combine controlling a number of subsidiary companies in the textile industries will see the difficulties one can get into. I would ask him to give this further consideration because of the difficulties that might arise in Lancashire and Yorkshire.

Question put, "That these words be there inserted in the Bill."

The House divided: Ayes, 256; Noes, 272.

Division No. 164.]
AYES
[12.19 a.m


Aitken, W. T.
Bullock, Capt. M.
Dray son, G. B.


Alport, C. J. M.
Bullus, Wing Commander E E
Drewe, C.


Amery, Julian (Preston, N.)
Burden, F. A.
Dugdale, Maj. Sir T. (Richmond)


Amory, Heathcoat (Tiverton))
Butcher, H. W.
Duncan, Capt. J A. L.


Arbuthnot, John
Butler, Rt. Hn. R. A. (S'ffr'n W'ldn)
Duthie, W. S.


Ashton, H. (Chelmsford)
Carr, Robert (Mitcham)
Eccles, D. M.


Assheton, Rt. Hon. R. (Blackburn, W)
Carson, Hon. E.
Elliot, Rt. Hon. W E


Astor, Hon. M. L
Channon, H.
Erroll F. J.


Baker, P. A. D.
Churchill, Rt. Hon. W. S.
Fisher, Nigel


Baldock, Lt.-Cmdr. J M
Clarke, Col. Ralph (East Grinstead)
Fort, R


Banks, Col. C.
Clarke, Brig. Terence (Portsmouth, W.)
Foster, John


Baxter, A. B.
Conant, Maj. R. J. E.
Fraser, Hon. Hugh (Stone)


Beamish, Maj. Tufton
Cooper, Sqn. Ldr. Albert (Ilford, S.)
Fraser, Sir lan (Morecambe &amp; Lonsdale)


Bell, R. M.
Cooper-Key, E. M.
Fyfe, Rt. Hon. Sir David Maxwell


Bennett, Dr. Reginald (Gosport)
Corbett, Lt.-Col. Uvedale (Ludlow)
Gage, C. H.


Bennett, William (Woodside)
Craddock, Beresford (Spelthorne)
Galbraith, Cmdr. T. O (Pollok)


Bevins, J. R. (Liverpool, Toxteth)
Crookshank, Capt. Rt. Hon. H. F. C.
Galbrailh, T. G. D. (Hillhead)


Birch, Nigel
Crouch, R. F.
Gammans, L. D


Bishop, F. P.
Crowder, Capt. John (Firchley)
Garner-Evans, E. H. (Denbign)


Black, C. W
Crowder, Petre (Ruislip—Northwood)
Gales, Maj. E. E.


Boles, Lt.-Col. D. C. (Wells)
Cundiff, F. W.
Gomme-Duncan, Col. A


Bossom, A. C.
Cuthbert, W. N.
Gridley, Sir Arnold


Boyd-Carpenter, J. A
Darling, Sir William (Edinburgh, S)
Grimond, J.


Boyle, Sir Edward
Davidson, Viscountess
Grimston, Hon. John (St. Albans)


Bracken, Rt. Hon. B.
Davies, Nigel (Epping)
Grimston, Robert (Westbury)


Brains, B. R.
de Chair, Somerset
Harden, J. R. E.


Braithwaite, Sir Albert (Harrow, W.)
De la Bère, R.
Hare, Hon. J. H. (Woodbridge)


Braithwaite, Lt.-Cdr. G. (Bristol, N.W)
Deedes, W. F.
Harris, Frederic (Croydon, N.)


Bromley-Davenport, Lt.-Col. W
Digby, S. Wingfield
Harris, Reader (Heston)


Brooke, Henry (Hampstead)
Dodds-Parker, A. D
Harvey, Air Cdre. A. V. (Macclesfield)


Browne, Jack (Govan)
Donner, P. W.
Harvey, Ian (Harrow, E.)


Buchan-Hapburn, P. G T.
Douglas-Hamilton, Lord Malcolm
Harvie-Watt, Sir George




Hay, John
Maclean, Fitzroy
Sandys, Rt. Hon. D.


Head, Brig. A H
MacLeod, Iain (Enfield, W)
Scott, Donald


Heald, Lionel
MacLeod, John (Ross and Cromarty
Shepherd, William


Henderson, John (Cathcart)
Macpherson, Major Niall (Dumfries)
Smiles, Lt.-Col. Sir Walter


Hicks-Beach, Maj. W. W.
Maitland, Cmdr. J. W.
Smithers, Peter (Winchester)


Higgs, J. M. C.
Manningham-Buller, R E
Smithers. Sir Waldron (Orpington)


Hill, Dr. Charles (Luton)
Marlowe, A. A. H.
Smyth, Brig. J. G. (Norwood)


Hill, Mrs. E. (Wythenshawe)
Marples, A. E.
Snadden, W. McN.


Hinchingbrooke, Viscount
Marshall, Douglas (Bodmin)
Soames, Capt. C


Hirst, Geoffrey
Marshall, Sidney (Sutton)
Spearman, A. C. M.


Hops, Lord John
Maude, Angus (Ealing, S)
Spence, H.R. (Aberdeenshire, W.)


Hopkinson, Henry
Maude, John (Exeter)
Spens, Sir Patrick (Kensington, S.)


Hornsby-Smith, Miss P.
Maudling, R
Stanley, Capt. Hon. Richard (N. Fylde)


Horsbrugh, Rt. Hon. Florence
Mellor, Sir John
Stevens, G. P.


Howard, Gerald (Cambridgeshire)
Molson, A. H. E.
Steward, W. A. (Woolwich, W.)


Howard, Greville (St. Ives)
Monckton, Sir Walter
Stewart, Henderson (Fife, E.)


Hudson, Sir Austin (Lewisham, N.)
Morrison, John (Salisbury)
Stoddart-Scott, Col. M.


Hudson, W. R. A. (Hull, N.)
Morrison, Rt. Hon. W. S. (Cirencester)
Storey, S.


Hurd, A. R.
Mott-Radclyffe, C. E
Strauss, Hendry (Norwich, S.)


Hutchinson, Geoffrey (Ilford, N.)
Nabarro, G.
Stuart, Rt. Hon. James (Moray)


Hutchison, Lt.-Com. Clark (E'b'rgh W)
Nicholls, Harmar
Summers, G. S.


Hutchison, Col. James (Glasgow)
Nicholson, G.
Sutcliffe, H.


Hyde, Lt.-Col. H. M.
Noble, Cmdr. A. H. P.
Taylor, Charles (Eastbourne)


Hylton-Foster, H. B.
Nugent, G. R. H.
Teeling, W.


Jennings, R.
Nutting, Anthony
Thomas, J. P. L. (Hereford)


Johnson, Howard (Kemptown)
Oakshott, H. D.
Thompson, Kenneth Pugh (Walton)


Jones, A. (Hall Green)
Odey, G. W.
Thompson, Lt.-Cmdr. R (Croydon, W.)


Joynson-Hicks, Hon. L. W
Ormsby-Gore, Hon. W. D
Thorneycroft, Peter (Monmouth)


Kaberry, D.
Orr, Capt. L. P. S.
Thornton Kemsley, Col. C N


Kerr, H. W (Cambridge)
Orr-Ewing, Charles Ian (Hendon, N.)
Thorp, Brig R A F


Kingsmill, Lt.-Col. W. H
Orr-Ewing, Ian L. (Weston-super-Mare)
Tilney, John


Lambert, Hon. G.
Osborne, C.
Touches G. C


Lancaster, Col. C. G
Perkins, W. R. D.
Turner, H. F L


Langford-Holt, J.
Peto, Brig. C. H. M
Turton R H


Law, Rt. Hon. R. K.
Pickthorn, K.
Vane W. M. F.


Leather, E. H. C
Pitman, I. J.
Vosper, D. F.


Legge-Bourke, Maj E A H
Powell, J. Enoch
Wakefield, Edward (Derbyshire, W.)


Lindsay, Martin
Price, Henry (Lewisham, W.)
Wakeheld, Sir Wavell (Marylebone)


Linstead, H. N
Prior-Palmer, Brig. O
Walker-Smith, D. C.


Llewellyn, D.
Profumo, J. D.
Ward, Hon. George (Worcester)


Lloyd, Rt. Hon. G. (King's Norton)
Raikes, H. V.
Ward, Miss I. (Tynemouth)


Lloyd, Maj. Guy (Renfrew, E.)
Rayner, Brig. R
Waterhouse, Capt. Rt. Hon C


Lloyd, Selwyn (Wirral)
Redmayne, M.
Watkinson, H.


Lockwood. Lt.-Col. J. C
Remnant, Hon. P.
White, Baker (Canterbury)


Longden, Gilbert (Herts, S.W)
Renton, D. L. M.
Williams, Charles (Torquay)


Low, A R. W
Roberts, Maj. Peter (Heeley)
Williams, Gerald (Tonbridge)


Lucas, P. B. (Brentford)
Robinson, Roland (Blackpool S.)
Williams, Sir Herbert (Croydon. E.)


Lucas-Tooth, Sir Hugh
Robson-Brown, W.
Wills, G.


McAdden, S. J.
Rodgers, John (Sevenoaks)
Wilson, Geoffrey (Truro)


McCorquodale, Rt. Hon. M. S.
Roper, Sir Harold
Winterton, Rt. Hon. Earl


Macdonald, Sir Peter (I. of Wight)
Ropner, Col. L
Wood, Hon. R.


Mackeson, Brig H. R
Russell, R. S.



McKie, J. H. (Galloway)
Ryder, Capt. R. E. D.
TELLERS FOR THE AYES:


Maclay, Hon. John
Salter, Rt. Hon. Sir Arthur
Mr. Studholme and Major Wheatley




NOES


Acland, Sir Richard
Brook, Dryden (Halifax)
Dalton, Rt. Hon. H.


Adams, Richard
Brooks, T. J. (Normanton)
Darling, George (Hillsborough)


Albu, A. H.
Broughton, Dr. A. D. D.
Davies, A. Edward (Stoke, N.)


Allen, Arthur (Bosworth)
Brown, Thomas (Ince)
Davies, Ernest (Enfield, E.)


Allen, Scholefield (Crewe)
Burke, W. A.
Davies, Harold (Leek)


Anderson, Alexander (Motherwell)
Burton, Miss E.
Davies, Stephen (Merthyr)


Anderson, Frank (Whitehaven)
Butler, Herbert (Hackney, S)
de Freitas, Geoffrey


Awbery, S. S.
Callaghan, L. J.
Deer, G.


Bacon, Miss Alice
Carmichael, J.
Delargy, H. J


Baird, J.
Castle, Mrs. B. A.
Diamond, J.


Balfour, A.
Champion, A. J.
Dodds, N. N


Barnes, Rt. Hon. A. J.
Chetwynd, G. R.
Donnelly, D


Bartley, P.
Clunie, J.
Dugdale, Rt Hon J. (W. Bromwich)


Bellenger, Rt. Hon. F J
Cocks, F. S.
Dye, S.


Benn, Wedgwood
Coldrick, W.
Ede, Rt. Hon. J. C


Benson, G.
Collick, P.
Edelman, M.


Beswick, F.
Cook, T. F.
Edwards, John (Brighouse)


Bevan, Rt. Hon. A. (Ebbw Vale)
Cooper, Geoffrey (Middlesbrough, W)
Edwards, Rt. Hon. Ness (Caerphilly)


Bing, G. H. C.
Cooper, John (Deptford)
Edwards, W. J. (Stepney)


Blenkinsop, A
Corbet, Mrs. Freda (Peckham)
Evans, Albert (Islington, S.W.)


Blyton, W. R
Cove, W. G.
Evans, Edward (Lowestoft)


Boardman, H
Craddock, George (Bradford, S.)
Evans, Stanley (Wednesbury)


Booth, A.
Crosland, C. A. R.
Ewart, R


Bottomley, A. G.
Crossman, R. H. S
Fernyhough, E.


Bowles, F. G. (Nuneaton)
Cullen, Mrs. A.
Field, Capt. W J


Braddock, Mrs. Elizabeth
Daines, P.
Fletcher, Eric (Islington, E.)







Follick, M.
Lever, Harold (Cheetham)
Robertson, J. J. (Berwick)


Foot, M M.
Lever, Leslie (Ardwick)
Robinson, Kenneth (St. Pancras, N.)


Fraser, Thomas (Hamilton)
Lewis, Arthur (West Ham, N)
Rogers, George (Kensington, N.)


Freeman, John (Watford)
Lewis, John (Bolton, W.)
Royle, C.


Freeman, Peter (Newport)
Lindgren, G. S.
Shackleton, E. A. A.


Gaitskell, Rt. Hon. H T. N
Lipton, Lt.-Col. M.
Shurmer, P. L. E.


Ganley, Mrs. C S.
Logan, D. G.
Silverman, Julius (Erdington)


Gibson, C. W
Longden, Fred (Small Heath)
Silverman, Sydney (Nelson)


Gilzean, A.
McAllister, G.
Simmons, C. J.


Glanville, James (Consett)
MacColl, J. E
Slater, J


Gooch, E. G.
McGovern, J.
Smith, Ellis (Stoke, S.)


Gordon-Walker, Rt. Hon. P. C.
McInnes, J.
Smith, Norman (Nottingham, S.)


Greenwood, Anthony (Rossendale)
Mack, J. D.
Snow, J W


Greenwood, Rt. Hn. Arthur (Wakefield)
McKay, John (Wallsend)
Sorensen, R. W


Grenfell, Rt. Hon. D. R.
Mackay, R. W. G. (Reading, N.)
Soskice, Rt. Hon Sir Frank


Grey, C. F.
McLeavy, F.
Sparks, J. A


Griffiths, David (Rother Valley)
MacMillan, Malcolm (Western Isles)
Steele, T.


Griffiths, Rt. Hon. James (Llanelly)
McNeil, Rt. Hon. H.
Stewart, Michael (Fulham, E.)


Griffiths, William (Exchange)
MacPherson, Malcolm (Stirling)
Strachey, Rt. Hon. J.


Gunter, R. J.
Mainwaring, W. H.
Strauss, Rt. Hon. George (Vauxhall)


Haire, John E. (Wycombe)
Mallalieu, E. L. (Brigg)
Stross, Dr. Barnelt


Hale, Joseph (Rochdale)
Mallalieu, J. P. W (Huddersfield, E)
Sylvester, G. O


Hale, Leslie (Oldham, W.)
Mann, Mrs. Jean
Taylor, Bernard (Mansfield)


Hall, Rt. Hon. Glenvil (Colne Valley)
Manuel, A. C.
Taylor, Robert (Morpeth)


Hall, John (Gateshead, W.)
Marquand, Rt. Hon. H. A
Thomas, David (Aberdare)


Hamillon, W. W
Mathers, Rt. Hon. G.
Thomas, George (Cardiff)


Hannan, W.
Mayhew, C. P
Thomas, Iorwerth (Rhondda, W)


Hardy, E. A
Messer, F.
Thomas, Ivor Owen (Wrekin)


Hargreaves, A
Middleton, Mrs. L
Thorneycroft, Harry (Clayton)


Hastings, S.
Mikardo, Ian.
Thurtle, Ernest


Hayman, F. H.
Mitchison, G. R
Timmons, J.


Henderson, Rt. Hn Arthur (Tiplon)
Moeran, E. W
Tomney, F.


Hewitson, Capt M
Monslow, W
Ungoed-Thomas, Sir Lynn


Hobson, C. R
Moody, A. S.
Usborne, H.


Holman, P.
Morley, R.
Vernon, W. F


Holmes, Horace (Hemsworth)
Morris, Percy (Swansea, W.)
Wallace, H. W


Houghton, D.
Mort, D. L.
Watkins, T. E.


Hoy, J.
Moyle, A.
Webb, Rt. Hon. M. (Bradford, C)


Hubbard, T
Mulley, F. W
Weitzman, D.


Hudson, James (Ealing, N.)
Nally, W.
Wells, Percy (Faversham)


Hughes, Emrys (S Ayrshire)
Neal, Harold (Bolsover)
Wells, William (Walsall)


Hughes, Hector (Aberdeen, N.)
Oldfield, W. H
West, D. G.


Hynd, H. (Accrington)
Oliver, G. H
Wheatley, Rt. Hon. John (Edinb'gh E.)


Hynd, J. B. (Attercliffe)
Orbach, M.
White, Mrs. Eirene (E. Flint)


Irvine, A. J. (Edge Hill)
Padley, W. E.
White, Henry (Derbyshire, N.E.)


Irving, W. J. (Wood Green)
Paget R. T.
Whiteley. Rt. Hon. W


Isaacs, Rt. Hon G A
Pannell, T. C.
Wigg, G.


Janner, B
Pargiter, G A
Wilcock, Group Capt C. A. B


Jay, D. P. T.
Parker, J.
Wilkins, W. A


Jeger, George (Goole)
Paton, A
Willey, Frederick, Sunderland


Jeger, Dr. Santo (St. Pancras, S)
Pearson, A
Willey, Octavius (Cleveland)


Jenkins, R. H.
Peart, T. F
Williams, David (Neath)


Johnson, James (Rugby)
Porter, G
Williams, Rev. Llywelyn (Aberlillery)


Johnston, Douglas (Paisley)
Price Joseph T. (Westhoughton)
Williams, Ronald (Wigan)


Jones, David (Hartlepool)
Price, Phillps (Gloucestershire, W.)
Williams, Rt. Hon. Thomas (Don V'lly)


Jones, Jack (Rotherham)
Proctor, W. T
Williams, W. T. (Hammersmith, S)


Jones, William Elwyn (Conway)
Pryde, D. J
Wilson, Rt. Hon. Harold (Huyton)


Keenan, W.
Pursey, Cmdr. H
Winterbottom, Ian (Nottingham, C.)


Kenyon, C
Rankin, J
Winterbottom, Richard (Brightside)


Key, Rt. Hon. C. W
Ree, Mrs. D.
Wyatt, W. L


King, Dr. H. M.
Reeves, J.
Yates, V. F.


Kinghorn. Sqn. Ldr E
Reid, Thomas (Swindon)
Younger, Rt Hon K


Kinley, J.
Reid, William (Camlachie)



Lang, Gordon
Richards, R.
TELLERS FOR THE NOES:


Lee, Frederick (Newton)
Robens, Rt. Hon. A
Mr. Popplewell and Mr. Bowden.


Lee, Miss Jennie (Cannok)
Roberts, Goronwy (Caernarvonshire)



Question put, and agreed to.

Mr. Hutchinson: I beg to move, in page 27, line 10, after "purposes," to insert:
and in determining any capital allowances to which the buyer may be entitled under Part IV of the Finance Act, 1944, or under Rule 6 or Rule 7 of the Rules applicable to Cases I and II of Schedule D or under any of the provisions of the Income Tax Act, 1945.
It might be for the convenience of the House to discuss with this Amendment the two Amendments which stand in my

name and that of my hon. Friends: In page 27, line 33, after "purposes," insert:
and in determining any balancing charges to which the seller may be liable under the provisions of the Income Tax Act, 1945";
and in line 43 to leave out subsection (3).
The purpose of this Amendment is to put right what appears to be an obvious omission, and indeed a very obvious injustice, if it is an omission. My hon. Friends have pointed out that these sales


between associated persons do not always result in loss of tax, and, indeed, in the majority of cases, are not intended to avoid tax. There is the case put by my hon. Friend the Member for Chippenham (Mr. Eccles) where one company, a subsidiary in a group of companies, supplies a piece of machinery or plant to another member of the group at a price less than the market value. That is a perfectly normal and perfectly legitimate transaction and indeed is, I suppose, one of the most common transactions to which this Clause relates.
Under this Clause the Inland Revenue authorities may, for the purpose of Income Tax and Profits Tax, treat the sale as having been made at what is called "arm's length" price, that is to say, the price at which it would have been made if the transaction had taken place between independent persons. It may be that there ate cases where it is desirable that that should be done and these Amendments of ours are not concerned with those cases. But if the price is to be readjusted in this way for one party there ought to be some reciprocal arrangement to meet the position of the buyer or the seller who is the other party to the transaction. The buyer may be entitled to capital allowances which, as the Clause stands, will be assessed, as I understand it, upon the actual price, not the readjusted price.
12.30 a.m.
If in the case of part of the transaction the price is to be assumed to be the notional price, and one party to the transaction is to be assessed in respect of Income Tax and Profits Tax upon the notional price and not the real price, then equally the other party ought to be assessed in respect of the capital allowances or the balancing charges to which he may be entitled on the same notional price as that employed in assessing the Profits Tax and Income Tax liability of the other party. The price should be the same for each purpose. It appears to be a very obvious omission that it is not; but then the right hon. and learned Gentleman may be going to tell us that the matter is already provided for in some other way which has hitherto escaped me. As the matter stands, the Clause ought to be amended on the lines we propose.

Mr. Selwyn Lloyd: I beg to second the Amendment.
The Amendment raises a number of fascinating topics which I do not propose to enter into at this time of night. Hon. Gentlemen opposite who have studied the Clause may consider that subsection (3) contains much of what is put forward in the first two of our Amendments, but I suggest that it would be very much clearer to adopt the form that we have proposed. If it were done in the way we suggest, subsection (3) would no longer be necessary.

The Attorney-General: The desire of the hon. and learned Member for Ilford, North (Mr. Hutchinson), is already realised, because, as the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) implied, subsection (3) already does the work. The hon. and learned Member for Wirral thought that it would be clearer to amend subsection (1). That is a matter of drafting, but I can assure the hon. and learned Member for Ilford, North, who was concerned as to the effect so far as capital allowances were concerned, that subsection (3) has precisely the effect he desires. It preserves the operation of all the provisions of the code relating to both Income Tax and Profits Tax which deals with capital allowances and, in particular, preserves the effect of Section 59 of the Income Tax Act, 1945, subsection (2) of which rewrites the price, so far as capital allowances are concerned, in exactly the same way as the price is rewritten under Clause 34. I urge that the change is not in any sense necessary.

Mr. Hutchinson: Mr. Hutchinson rose—

Mr. Speaker: The hon. and learned Gentleman is not entitled to make a second speech. I do not know whether he wants to talk again.

Mr. Hutchinson: In view of the explanation of the right hon. and learned Gentleman, I beg to ask leave to withdraw the Amendment.

Mr. Speaker: I beg the hon. and learned Gentleman's pardon.

Amendment, by leave, withdrawn,

Mr. Maudling: I beg to move, in page 27, to leave out lines 15 to 19, and to insert:


Provided that this subsection shall not apply where the buyer is resident in the United Kingdom and is carrying on a trade therein and either:—

(a)the price of the property falls to be taken into account as a deduction in computing the profits or gains or losses of that trade for income tax purposes, or
(b)the price of the property falls to be taken into account in computing any allowances to which the purchaser may be entitled under Rule 6 or Rule 7 of the Rules applicable to Cases I and II of Schedule D, or of any of the provisions of the Income Tax Act, 1945, or of Part IV of the Finance Act, 1944.

This Amendment is hardly a simple one, but its purpose can be described briefly. At the moment, when transactions take place between companies resident in the United Kingdom, they are not affected if the property passing falls to be taken into account as deduction in computing the profits or gains of the company, concerned. The Attorney-General explained earlier that in dealing with companies resident in this country, the Clause was designed to prevent easy transactions where the property passing was a revenue item in one case and a capital item in the other case and, as a result, a good deal of tax could be avoided by the second company subsequently selling the thing at a capital profit.
By this Amendment we suggest that the Clause is still too wide because there can be many transactions where an item passing may be of a capital nature but where a tax-free capital profit cannot be made. That will occur when the article concerned falls into the hands of the buying company to be treated as ranking for capital allowance. In other words, if the buying company buys it at an artificially low price, it merely artificially reduces its own depreciation allowances and, conversely, if it sells the article subsequently at a profit, it becomes liable to a balancing charge. In either case it would seem that the article passing from company A to company B is one that is taken into account in computing the capital allowances of company B and there cannot be an avoidance of tax liability.
This Amendment, therefore, is designed to limit even further the number of cases to which the mischief of Clause 34 must apply, and we contend that in limiting the

mischief of that Clause further, we do not leave any loophole for tax avoidance.

Mr. Eccles: I beg to second the Amendment.
Perhaps it might be permissible for me to say a word on my Amendment to page 28, line 19, which seeks to insert a new subsection (7) as follows:
(7) Where a sale of property is affected by the provisions of this section and both the buyer and the seller are resident in the United Kingdom, the following provisions of this subsection shall have effect where both the buyer and the seller by notice in writing to the surveyor so elect:—

(a)any difference between the price at which the property was, in fact, sold and the price determined in accordance with the previous provisions of this section shall not be charged to tax on the occasion of such sale; and
(b)if, within a period of five years thereafter, the property is resold by the said buyer, the difference omitted from charge by virtue of paragraph (a) of this subsection shall then be charged to tax on the said buyer, provided that, save as provided in paragraph (c)of this subsection, such charge shall not exceed the amount by which the proceeds of the resale exceed the actual cost of the property to the said buyer; and
(c)if, however, the proceeds of that resale constitute a trading receipt in the hands of the said buyer, the proviso to the preceding paragraph of this subsection shall not apply.

It deals with the same point but, having heard the argument first put forward by the hon. and learned Member for Ilford, North (Mr. Hutchinson) and now by the hon. Member for Barnet (Mr. Maudling) I am not so much in love with my Amendment as I was. None the less, I think this is a real point where it happens that the sale is made by a company on revenue account and the purchase is on capital account.
What I hoped was that at any rate the tax would not be collected for a period during which the purchaser would hold the asset within the group, and then, if the asset is sold, the tax would be collected on the difference between the sale price and the price at which the first seller parted with the asset. That was the additional point of my Amendment, but fundamentally it deals with the same sort of transaction as my hon. Friend has brought forward and, therefore, I shall be glad if the Attorney-General will reply to both.

The Attorney-General: I do not think the Amendment would improve the present situation. As the Clause reads, this is how it works. Supposing there is a dealing company which sells at cost to a holding company, the one controlling the other. They are inter-related companies with inter-related holdings. The dealing company is taxed to Schedule D upon the profit that it would have made if it had sold at the arm's-length price. If one looks at the position of the holding company, which can only realise a capital profit should it dispose of the asset, the situation is as follows.
By virtue of subsection (2) of Section 59 of the Income Tax Act, 1945, it is treated as having acquired the asset at the higher price— the market price—from the seller. Therefore, the holding company, the buyer, is entitled to claim its capital allowances upon the footing that it has paid the higher price although in fact it has only paid the cost price. That works perfectly reasonably.
In one case the selling company is taxed under Schedule D upon the basis that it makes the profit that it would have made on an arm's-length deal and similarly the holding company, although it has only paid the cost price, is entitled to claim to have its cost written down by capital allowances which would be appropriate to the full figure that it would have paid supposing it had bought at the market price. Similarly, for the purpose of balancing charges, when it disposes of the assets, it is able to treat itself as having gained the assets at a market price, and not at cost price. I do not think the suggestion made would improve the Bill; what we are doing is something fair to both sides, and I ask the House not to accept the Amendment.
The hon. Member for Chippenham (Mr. Eccles) referred to his own alternative, which is lower down on the Order Paper. I do not know if he proposes to endeavour to catch your eye, Mr. Speaker, at a later stage, nor whether I should be within the rules of order in referring to it; but if I may I would say, quite briefly, that that is another way of dealing with the situation without improving it. It is not reasonable that a group of companies should pay tax only if it sells the assets within the five years, as the hon. Gentleman suggests.

Mr. Erroll: Having listened very carefully to the Attorney-General, I should like to get just one point quite clear. The purchasing company will automatically be entitled to assume a higher profit, and it has only to show that the selling company has been charged at the higher selling price automatically to get relief of the assumed higher price. If that is provided by Section 59—if that relief is given—then I will not pursue the matter.

The Attorney-General: That is the automatic effect of Clause 59.

Amendment negatived.

The Attorney-General: I beg to move, in page 27, line 42, at the end, to insert:
(3) The preceding provisions of this section shall not apply in relation to any sale unless the Commissioners of Inland Revenue so direct, and where such a direction is given all such adjustments shall be made, whether by additional assessment, repayment of tax or otherwise, as are necessary to give effect to the direction.
The object of this Amendment is to meet an anxiety which hon. Members expressed in the very short discussion in Committee on this particular Clause, namely, that this would be automatically applied to all sorts of transactions as, for example, where the difference of the arm's length price and market price was quite small—that is to say all sorts of different sales which cannot be within the intended scope of the Clause.
We have met this anxiety by saying that every sale shall not be treated as automatic for the purposes of the Clause. It will only come into operation if the Commissioners take the initiative and direct that the Section is to apply to a particular set of circumstances; and so, although hon. Members may not all like each feature of the Clause, I think all will agree that this prevents it from operating in an oppressive manner. There is nothing automatic about the operation of the Clause; only where the Commissioners think that there should be a direction about a certain transaction will action be taken.
Question proposed, "That those words be there inserted in the Bill."

12.45 a.m.

Mr. Erroll: I beg to move, as an Amendment to the proposed Amendment, after "sale" to insert:


or any class of sales made in accordance with conditions approved by the Treasury nor to any other sale.
The Attorney-General, in introducing his new subsection, has undoubtedly improved the operation of this Clause, although the Clause as a whole is one to which we still take the strongest objection. The Attorney-General made it plain in his remarks that not every sale is now to come automatically within the purview of the Clause, but only those where the Commissioners so direct and where, to use his phrase, some special features attach to the sale.
The position, however, does remain extremely unsatisfactory for companies carrying on honourable transactions in this particular field, because they are still left without any form of guidance as to what these special features may be. The Commissioners may direct. In what circumstances are they going to direct? What are to be deemed to be special features by the Commissioners? There are many bodies of Commissioners in some fields of taxation. There is also room, therefore, for a considerable divergence of opinion. Firms are left, as the new subsection stands, entirely in the dark as to where a Commissioners' direction may fall.
The purpose of my Amendment is to enable the Treasury to draw up a short list of those conditions which are perfectly all right and which should not under any circumstances attract the direction of the Commissioners. It need not be comprehensive. It need not be a complete list, but any list, however short, would be a tremendous help to the honourable firms. We on this side are trying to protect the position of the honourable firms which are doing the transaction or business in an honourable fashion. It would enable them to know what classes of sale were, in fact, exempt from the proceedings of the proposed new subsection. We hope very much that the Chancellor of the Exchequer or the Attorney-General will accept this Amendment although we recognise that initially it may mean a little extra work for the Treasury, but in the long run it will mean a great deal of relief for honourable firms.

Mr. Selwyn Lloyd: I beg to second the Amendment to the proposed Amendment.
I should also like, if possible, to discuss at the same time the next Amendment, which is at slight variance with this Amendment and which is in the names of my hon. Friend the Member for Chippenham (Mr. Eccles), my hon. Friend the Member for Barnet (Mr. Maudling), and myself. That Amendment is in line 4, at the end, to add:
Provided that the Treasury may before or after the conclusion thereof sanction for the purposes of this section any sale or purchase of property falling within any of the provisions of this section or any class of such sales or purchases and this section shall not apply to any sale or purchase or class thereof so sanctioned.
The only difference between the two Amendments is that the second one does seem to give the Treasury rather wider power both before and after the conclusion of transactions to sanction them. Otherwise, there is not much difference between the two Amendments. In the Clause as originally drafted, the word "shall" appeared. It stated:
… the like consequences shall ensue as would have ensued if the property had been sold for the price which it would have fetched if the transaction had been a transaction between independent persons
dealing at arm's length. That is mandatory and is an obvious defect in the Clause, and we are grateful to the Attorney-General for acknowledging that defect and for slightly improving that Clause by putting it at the Commissioners' discretion. It is ridiculous to limit that discretion to individual transactions.
According to the Chancellor's wording the Commissioners have to make a direction with regard to each individual sale. Surely, that cannot be what is meant? All we seek to do in this Amendment is to enable permission to be given and have added a further safeguard to Treasury conditions by seeking a further condition to be given to classes of sale. Whether it is in the form of this Amendment or the succeeding one, we do not greatly care, but I think there is real substance for one or other of the Amendments.

The Attorney-General: The hon. Gentleman was anxious lest the direction had to be given in each and every kind of sale. The Amendment I moved simply provided that the Clause shall not apply to any sale at all unless the Commis


sioners do take the initiative and make a direction with regard to it. The proposal about groups or categories of sale is really very difficult to arrange, and I do not see how it could be done. Sales differ almost infinitely in their incidence, and it is practically impossible, as a matter of drafting, to try to group them in categories which you can except. The only way you can test them is by reference to price.
I do not think the proposal made by either hon. Gentlemen, in either the first or the second Amendment, is one we can accept. There are a great many sales. It would be very difficult to give an advance kind of sanction in respect of particular sales, and it would be equally difficult, as a matter of drafting, to take out old proofs of sales. I hope the House will agree it is not feasible to adopt either of the proposals.
The Commissioners, in so far as is possible—and I cannot give any further undertaking—always do try to give such assistance as they can, but I could not possibly go further and commit them in any way to a systematic sanctioning of sales in advance, nor could I undertake to try, by drafting, to formulate categories of sales which would not be within the scope of the Clause.
The object of the Amendment was to prevent the Clause from being vexatiously operated in small cases where the difference between the arm's-length price and the actual price was so small as not to make it a kind of transaction hit at by the Clause. Although I would like to agree if I were able, I feel it is impossible to accept either proposal made.

Viscount Hinchingbrooke: I should have thought that the Attorney-General's argument applied particularly to his own case. If these sales are to be so spasmodic, arising at all sorts of inconsequential times, then the Commissioners of Inland Revenue are going to be no better at pursuing them and discovering them than the Treasury are at laying down the broad conditions under which they are to be taken into account.
I should have thought that it was very much better to have left out of account altogether the idea that the Commissioners

of Inland Revenue should have any jurisdiction in this case and, recognising that these are by no means transactions which will be resorted to up and down the country by enormous numbers of firms, to have got the Treasury, as is proposed in the Amendment, to lay down a special class of sale and conditions in accordance therewith. Then anyone who contravened them could be brought up and dealt with. I should have thought that every remark the Attorney-General passed against this Amendment applied with great force against his own Amendment.

Mr. Eccles: I cannot see why the Attorney-General should refuse this Amendment, because, after all, we are only seeking to give the Treasury the power to describe classes of sales. Quite clearly, the whole of the Government's argument is that they really do not know how this Clause is going to work. They have admitted there will be all sorts of transactions that come within its scope. They have given us a concession we pressed for in Committee that the Clause should no longer be mandatory. Yet they will not take the very obvious power of being in a position to set the mind of industry at rest, if and when they discover a general class of sales which could be excepted.
Why not take that power? Experience may well show that there are certain classes of transactions, say, connected with the export trade, where really there could be no question that the companies should be put in a position to carry out these sales without all the time wondering whether or not the Treasury are going to come along and inquire into the price they have made. I do think it is up to the Government when they bring in such ill-digested legislation—which they defend with one set of arguments on the Committee stage and another set on Report—at least to take powers to make it less harmful and irritating to the ordinary trader.

Amendment to the proposed Amendment negatived.

Proposed words there inserted in the Bill.

Schedule.—(ENTERTAINMENTS: REVISED FULL RATES OF DUTY.)


Amount of Payment
Rate of Duty


Where the amount of the payment, excluding the amount of duty—



s.
d.

s.
d.

s.
d.


exceeds

7
and does not exceed

8
…
…
…
…
…

1


exceeds

8
and does not exceed

8½
…
…
…
…
…

1½


exceeds

8½
and does not exceed

10
…
…
…
…
…

2


exceeds

10
and does not exceed

10½
…
…
…
…
…

4½


exceeds

10½
and does not exceed
1
0
…
…
…
…
…

6


exceeds
1
0
and does not exceed
1
1
…
…
…
…
…

8


exceeds
1
1
and does not exceed
1
1½
…
…
…
…
…

10½


exceeds
1
1½
and does not exceed
1
2¼
…
…
…
…
…

10¾


exceeds
1
2¼
and does not exceed
1
5
…
…
…
…
…
1
0


exceeds
1
5
and does not exceed
1
6
…
…
…
…
…
1
1


exceeds
1
6
and does not exceed
1
9
…
…
…
…
…
1
3


exceeds
1
9
and does not exceed
1
9½
…
…
…
…
…
1
3½


exceeds
1
9½
and does not exceed
1
10
…
…
…
…
…
1
6


exceeds
1
10
and does not exceed
1
10½
…
…
…
…
…
1
6½


exceeds
1
10½
and does not exceed
2
1
…
…
…
…
…
1
9


exceeds
2
1
and does not exceed
2
1½
…
…
…
…
…
1
9½


exceeds
2
1½
and does not exceed
2
3
…
…
…
…
…
1
10


exceeds
2
3
and does not exceed
2
3½
…
…
…
…
…
1
10½


exceeds
2
3½
and does not exceed
2
7
…
…
…
…
…
2
3


exceeds
2
7
and does not exceed
2
7½
…
…
…
…
…
2
3½


exceeds
2
7½
and does not exceed
3
1
…
…
…
…
…
2
9


exceeds
3
1
and does not exceed
3
1½
…
…
…
…
…
2
9½


exceeds
3
1½
and does not exceed
3
6
…
…
…
…
…
2
11


exceeds
3
6
and does not exceed
3
6½
…
…
…
…
…
2
11½


exceeds
3
6½
and does not exceed
3
9
…
…
…
…
…
3
3


exceeds
3
9
and does not exceed
4
0
…
…
…
…
…
3
6


exceeds
4
0
and does not exceed
4
3
…
…
…
…
…
3
8


exceeds
4
3
and does not exceed
4
3½
…
…
…
…
…
3
8½


exceeds
4
3½
and does not exceed
4
6
…
…
…
…
…
4
0


exceeds
4
6
and does not exceed
4
9
…
…
…
…
…
4
3


exceeds
4
9
and does not exceed
5
0
…
…
…
…
…
4
6


exceeds
5
0
and does not exceed
5
7
…
…
…
…
…
4
11


exceeds
5
7
and does not exceed
6
0
…
…
…
…
…
5
4


exceeds
6
0
and does not exceed
6
6
…
…
…
…
…
5
6


exceeds
6
6
and does not exceed
6
8
…
…
…
…
…
5
10


exceeds
6
8



…
…
…
…
…
5
10 for the first 6s. 8d. and 3d. for every 3d. or part of 3d. over 6s. 8d. [Mr. Gaitskell.]


Brought up, read the First and Second time, and added to the Bill.

Orders of the Day — First Schedule.—(ENTERTAINMENTS: FULL RATES OF DUTY.)

Amendment made: In page 31, in line 2, leave out Schedule 1.—(Mr. Gaitskell.]

Orders of the Day — Fifth Schedule.—(PURCHASE TAX—AMENDMENTS OF SCHEDULE OF CHARGEABLE GOODS.)

Mr. Jay: I beg to move: in page 47, line 20, at the end to insert: "and un-coloured."
This and the next two Amendments are intended to make a change in the definition of the group of dusters and dish cloths which, the House will remember, we sought to exempt in the original proposals of the Bill. It was intended to exempt the ordinary dusters and dish cloths in common use without

opening the door to evasion by bringing in coloured and fancy articles. We thought we were protected by the use of the word "unbleached," but it turns out that some unbleached dusters are also coloured, and therefore, with the agreement of the House, and after consultations with the trade and the Customs and Excise, we propose to add the words in the amendments.

Amendment agreed to.

Further Amendments made: In page 47, line 33, after "unbleached," insert "and uncoloured."

In line 38 leave out "unbleached cotton cloth," and insert "cotton cloth, unbleached and uncoloured."—[Mr. Jay.]

Mr. Jay: I beg to move, in page 49, line 27, at the end to insert:

Orders of the Day — PART II

Amendments effective from 25th June, 1951.

11. In Group 4, after the paragraphs added by Part 1 of this Schedule there shall be added the following paragraph:—


"(i) insoles, except insoles made wholly or partly of fur skin (including any skin with fur, hair or wool attached)
Exempt."

12. In Group 6, after the paragraph added by Part I of this Schedule there shall he added the following paragraph:—


"(q) lining socks and seat socks, being shaped pieces of fabric for incorporation in foot wear
Exempt."

13. In Group 31, in paragraph (b), after the word "brushes," there shall be inserted the words "(except toothbrushes)," and after the paragraph added by Part I of this Schedule there shall be added the following paragraph—


"(d) toothbrushes
Exempt."

This Amendment carries out our undertaking in Committee to exempt tooth brushes and insoles from Purchase Tax. We have also thrown in for good measure lining socks and seat socks, although that Amendment was not actually called in Committee. For the information of hon. Gentlemen, lining socks and seat socks are materials used in repairs to boots and shoes.

1.0 a.m.

Mr. Snow: I intervene only to remind my hon. Friend that when Purchase Tax is removed, there is often a rise in the actual price. Will he consider recommending to the President of the Board of Trade the reimposition of price control?

Mr. Erroll: Perhaps the hon. Gentleman could tell us what is the extent of this benefit. How much is the concession on lining socks and seat socks.

Mr. Jay: The concession on tooth brushes will cost £450,000; the other two together about £50,000.

Amendment agreed to.

Orders of the Day — Sixth Schedule.—(TRANSITIONAL PROVISIONS IN CONNECTION WITH INCREASE IN RATE OF PROFITS TAX.)

Mr. Molson (The High Peak): I beg to move, in page 51, line 27, at the end, to insert:
or, if the body corporate, society or other body so elects, the average of the total dividends assignable to each of the three immediately preceding accounting periods thereof.

One of the main provisions of the Chancellor's Budget was to increase the tax on distributed profits from 30 per cent. to 50 per cent. The Sixth Schedule of the Finance Bill deals with transitional provisions dealing with the increase in the rates of Profits Tax. Whereas, generally speaking, the increase is to take effect in respect of the financial year 1951–52, the increased Profits Tax has retrospective operation in respect of any increase of dividends declared after the date of the Chancellor's Budget speech in respect of earnings made in the financial year, 1950–51.
It is not my purpose to argue against Profits Tax. It is not my purpose to argue against making Profits Tax retrospective in the case of increased distribution of profits What I am asking the Chancellor to agree to is to take as a datum of the previous rate of profit something fairer than the arbitrary year of the last accounting period. Under the Bill as drafted, that year is taken as the datum period and any increase which was announced after the date of the Budget speech results in any increase incurring this retrospective tax at the rate of 50 per cent. I suggest to the Chancellor that, without in any way departing from the general principle he is seeking to maintain, it would be fairer to give to the taxpayer the right, at his choice, to take the average of the distributions made in the three preceding years.
In a case which has been brought to my notice there had been a number of years in which distribution had been about 10 per cent., which was only a moderate proportion of the profits earned, the rest being ploughed back into the business in a way which I am sure would commend itself to the right hon. Gentleman. In 1949, this company suffered a substantial setback, and again in accordance with sound financial principles, they reduced the dividend from 10 per cent. to 2½ per cent. As a result of great efforts on the part of all concerned, the earnings of the company were again restored and, shortly after the right hon. Gentleman made his Budget speech this year, they announced a dividend of 10 per cent., which was still only about one-half of the total earnings of the company. I suggest that it would be far fairer to allow the company the option of taking as a datum period the average of the three preceding years.
We have had a great deal of experience in the selection of a single arbitrary year for various purposes. In the case of agriculture, for example, for a very long time rations for animals and so forth were based on the number of livestock which happened to be maintained in 1939, and the effect of taking a year and treating it as a basic year was to discourage any progress or improvement in the years that follow. I suggest it is most undesirable that this heavy and almost penal taxation is being imposed retrospectively and that it should be imposed on the basis of a single year.
If the Chancellor feels inclined to argue that 1949 was on the whole a prosperous year and does not think that a great many companies were adversely affected in this way, the answer I would give to him is that only a small number of companies would desire this relaxation or the alternative basis of taxation which I have suggested in this Amendment. In that case the cost to the Treasury would be comparatively small. If at small cost to the Treasury he is able to relieve what in some cases is a harsh provision, I hope he will be willing to do so.
In the course of debates on the Finance Bill last year, before the right hon. Gentleman became Chancellor of the Exchequer, I very well remember one argument he advanced when comparing the attempt at freezing wages with the freezing of dividends. He said then, in the case of the wage earner, that if they forwent an increase in wages at no time would they receive retrospectively an additional payment. He pointed out that where dividends were not paid but were ploughed back into the company there was a larger capital on which profits could be earned and the shareholders would in this way obtain a benefit.
What I wanted to say to the Chancellor of the Exchequer then, and it is relevant on this occasion, is that there are no reductions in wages taking place now. In the case of dividends there is no guarantee that dividends in individual companies, over a number of years, may not be reduced, and the effect of penalising any increase in dividends means that it is impossible for the dividend receiver to be compensated in cases where there has been a sudden and undeserved reduction in those dividends.
In the Amendment I am asking that the penal, retrospective operation of the new Profits Tax on profits which were earned at a time when the tax was only 30 per cent. should not be such that an additional burden should be thrown on companies where for some years there has been a sudden reduction in dividends. Because the cost of this concession is not likely to be great and it would relieve the burden on a number of companies, I hope that the Chancellor of the Exchequer will be willing to accept the Amendment.

Lieut.-Commander Braithwaite: I beg to second the Amendment so admirably moved by my hon. Friend.

The Attorney-General: I do not really think that we ought to accept this proposal for the following reason. The dividends about which one is talking are those declared after the ninth day of April, 1951. The provision applies only in the case of dividends declared after that date; that is, after the date of the Chancellor of the Exchequer's Budget speech. What the Chancellor said in his speech was perfectly clear. After stating that he proposed to increase the Profits Tax, the Chancellor said,
If increased dividends are declared on or after today…
that is, 10th April,
for a period before 1st January, the increase will, as on previous occasions, be subject to the increased rate of tax."—[OFFICIAL REPORT, 10th April, 1951; Vol. 486, c. 855.]
Therefore, any company which declared increased dividends after the date of that statement knew perfectly well what the taxation consequences were bound to be. They did so with their eyes open, and they knew that the dividends they declared would be bound to attract the 50 per cent. rate in respect of those dividends. If one states that they are to have this proposed measure of relief, how far is one to go? One could perfectly well, and consistently with what has been said, ask for other concessions. Why not ask to be allowed to pay dividends equal to the highest of the three years before the relevant date? One could increase claims for substantial reliefs of that sort almost indefinitely.
It was felt that one had to draw a reasonable line somewhere. We felt that if a company, knowing perfectly well what must be the consequences of declaring a dividend in respect of a period after the Budget statement, did so, it was reason-


able to take the one chargeable accounting period which lapsed before the date set out in the Schedule.
We feel that the concession suggested has not any logic to justify it. This would be a concession to a person who knows what he is doing, and if it were made it would, in logic, involve making endless other concessions. There is no reason why we should draw the line there.

Mr. Molson: May I say that the Attorney-General is arguing against an unreasonable proposition which I did not put forward. I put forward a suggestion on the basis of a three years' accounting period which seemed to me reasonable and fair to both parties.

Sir J. Mellor: I am surprised that the Attorney-General should say that merely because the Chancellor of the Exchequer said in his Budget speech that dividends declared after that date would be subject to increased tax, that that is an answer to the Amendment. After all, what Ministers say in speeches is not law. What the Chancellor of the Exchequer said in his Budget speech did not commit the House at all, I really think that the Attorney-General made a rather unwarrantable assumption when he said that that was sufficient answer to the Amendment. I consider that he has not given a good answer.

Amendment negatived.

Orders of the Day — Seventh Schedule.—(ENACTMENTS REPEALED.)

Mr. Jay: I beg to move, in page 53, line 23, at the end, to insert:


12 &amp; 13 Geo. 6. c 47.
The Finance Act, 1949.
Section seven, except subsection(3); the Fifth Schedule.


This Amendment is consequential on the alteration of the duty on matches, which the House agreed to during an earlier stage. I do not think it calls for any protracted discussion.

Amendment agreed to.

Bill to be read the Third time this day.

Orders of the Day — CONTROL OF DOGS

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Hannan.]

1.16 a.m.

Lieut.-Commander Baldock: Late as is the hour, it may be of interest to hon. Members, or at any rate to those who have had the misfortune to miss their last train home, to discuss the serious result arising from the increased population of dogs in this country and the apparent increase in the numbers of irresponsible owners of them. The principal and most serious result of this increase is the reduction in the number of sheep in the United Kingdom.
At the very time when the utmost production of wool and mutton is needed to balance our export-import position and to increase our rations, farmers, particularly in the neighbourhood of large towns, are having to abandon sheep grazing and, to a lesser extent, the keeping of poultry. Not that dogs are less of a menace to poultry but that the menace only applies to those poultry on free range, which are apparently small in number nowadays, though dogs are inevitably reducing the numbers in those areas.
This destruction of valuable livestock, both sheep and poultry, is going on the whole time. We had a particularly unpleasant example in my own constituency only recently, which I was glad to see was given considerable publicity in the Press. I say that because I will suggest later that it is mainly by the force of public opinion being directed against these irresponsible people that the problem can be best handled.
To my own knowledge many farmers in Leicestershire have given up sheep-rearing because of this menace. It is not possible, of course, to give the figures because it is a subject upon which statistics could never be gathered. There is no means of finding out how many people have changed their plans because of this trouble. But it is small wonder that farmers have given up sheep in those areas.
I have been watching the papers only recently to find information to supplement my limited experience. In the course of the last few weeks, I have found such cases


as that in which 368 sheep were recently killed and many more were missing in only six weeks in the small Rochdale area of Lancashire. In another case, in four months in seven northern counties 800 sheep were reported killed. In another five counties last year 1,000 sheep were reported killed and more than 300 injured in 12 months. And those were only the reported cases. There might well have been more. There was the case of the farmer who turned to poultry-keeping and lost 53 head of poultry in one day. I know that incidents in which a dozen or 20 poultry are killed are happening very frequently all over the country. I have had that experience myself on more than one occasion.
As the Joint Parliamentary Secretary to the Ministry of Agriculture possibly knows, the Farmers' Union in Scotland estimate that 250,000 meat rations are lost every year through this cause. No doubt the situation is still worse in England because there are far more large towns and a far higher population of dogs in areas where sheep are accessible to them. That is the loss by the actual killing and damaging of sheep. It does not take into account the number which are lost when farmers give up sheep rearing. As I said, there are not statistics available on that point. There have recently been reports from such counties as Essex, Lancashire, Surrey and Kent of farmers giving up sheep-rearing for this reason.
In addition to the fully-grown animals, there is also the loss of lambs through the worrying and chasing of ewes in lamb, a figure which can never be computed. The act of chasing the sheep, especially if they are on the hills and in remote districts, may never be witnessed and it is very unlikely that the dog or dogs responsible—very often there are several of them—and the owners will ever be known. It is becoming more difficult to obtain shepherds to stand about to watch the sheep and protect them from marauding dogs, and it is often only when the abortions and stillbirths start that it is realised that damage was done weeks before. There have been cases where lamb crops, or large proportions of them, have been lost, and I know from personal experience the effect on the small farmer if he loses a large proportion of his lamb crop, which may be his mainstay.
Even if the owner of the dog responsible for the damage is known, it may often be that he is a person of very little substance and quite incapable of paying the very heavy damages which might be obtained if civil action was taken in the courts, but that would require long attendance at the courts and possibly heavy expenditure and it is a very difficult thing for the farmer to undertake.
The farmer is left with little redress in the case of the chasing about of sheep, especially those in lamb, because, unless the dog is actually molesting and attacking the sheep, the farmer is not permitted to shoot at it and to protect himself in that way. Comparatively recently 13 guineas damages were awarded against a farmer who shot a dog which was chasing some sheep round an orchard. This puts the farmer in a very difficult position. He has no redress but to get the dog declared by the local magistrates to be dangerous and ordered to be kept under control. That is the full extent of the protection which he can obtain at the present time.
Another situation which has given me a certain amount of anxiety is that the situation will probably be aggravated by the National Parks and Access to the Countryside Act. People with dogs will be allowed access to practically any part of the country with their dogs. Judging by the present degree of irresponsibility of certain dog owners, the expression "under control," which is the only thing governing the admission of dogs to these areas, will not have any very great meaning, especially as it is not defined under the Act.
The circumstances of these killings and harryings are in most cases highly unpleasant. I will spare the House some of the most gruesome details, but as an instance there was a case at Bridgnorth, Shropshire, lately where 63 in-lamb ewes worth £500 were driven by dogs on to a frozen pond and fell through the ice and were drowned. In Devonshire five ewes and a lamb had to be slaughtered because of the dreadful state they were in. and a ram which had been trying to protect them and was still alive had no face or ear left and its head and nose were bared to the bone. The sooner we leave these gruesome details the better, but the matter has many aspects, and there is not only the economic aspect.


It is a highly undesirable situation at the present time.
In view of the facts, it is hardly surprising that there are fewer sheep now in the United Kingdom than there were before the war, in spite of the greatly increased need for them and the targets for higher productivity of agriculture. I realise that sheep worrying is not the only cause for the reduction of the sheep population. There have been other factors—the weather, and so on—but it is certainly an important contributory factor, and that is emphasised by the figures.
If we take 1938 and compare it with 1950, the United Kingdom sheep population between 1938 and 1950 fell from 26,775,000 to 24,430,000. But what is much more significant, comparing England and Wales for those two years, we find that the drop is from 17,912,000 of 9,538,000—a drop of almost 50 per cent. in the more highly populated areas. That illustrates conclusively how significant a factor is this worrying by dogs. Another result, which I appreciate does not come under the Department of the hon. Gentleman, but which is worth mentioning, is the considerable number of road accidents caused by some sections of the public not keeping their dogs under control. I have examined figures for Leicestershire, and I find that dogs are the second principal cause of accidents in the county, pedestrians being the chief. Dogs were the cause of 500 accidents in Leicestershire alone in 1950, so that over the whole country dogs must be the cause of an enormous number of accidents.
I believe that in the light of this information—the loss of life on the roads, the loss of sheep, poultry and eggs, and of the dogs themselves through the accidents and what occurs after them—the Government should have an uneasy conscience about what is going on and should be endeavouring to take action to reduce the suffering and wastage of human and animal life which is taking place. But, as far as I can understand, no such view appears to be held.
My hon. Friend the Member for Newbury (Mr. Hurd) asked the Secretary of State for the Home Department only last Thursday for some figures about the position with regard to sheep worrying. The reply he received was that the Home

Secretary had consulted his right hon. Friend the Minister of Agriculture, who was of opinion that the value of the results which would be obtained from collecting such information would not be commensurate with the labour involved. That is a disappointing attitude on the part of the Government—that they do not consider this question is worth much investigation and that these figures are not even worth collecting—because I believe this to be an important problem and one that should be faced.
While I realise that the main method of dealing with it must be to endeavour to enlighten public opinion on how antisocial and undesirable it is for people to have dogs when they are unable or disinclined to keep them under proper control, and that the main force must be the focussing of public opinion against those people, I hope that the Government will do everything possible in their power to enlighten public opinion in that direction.
But I believe that there are other things that could be done. The situation at the moment is that magistrates and police have fairly considerable powers, but they are not entirely satisfactory. The police are able to impound and have destroyed any stray dogs, and the magistrates can direct that a dog be called dangerous and be destroyed or, alternatively, kept under control with the penalty of £1 a day fine if it is not so controlled. If those powers were exercised more frequently, they would have a deterrent effect. Perhaps something can be done in that direction.
Then, the local authority is also able to pass regulations to the effect that dogs shall be kept under control, but the extraordinary thing is that it can only so provide between the hours of sunset and sunrise. Surely, if a local authority is to have this power it is just as important that dogs should be controlled during the day as during the hours of darkness. I see that the Lord Chief Justice himself has said that in his opinion the law in this respect requires amendment.
Then, also, there might be improvements in the method of licensing dogs. Some deterrent effect might be introduced by the causing of dog licences to bear some description on them of the dogs concerned there should not be merely a licence for "a dog," but a licence bear-


ing the age and description of the animal. That, I believe, is done in Northern Ireland. Furthermore, the fee for a licence for a bitch should be higher than for a dog. A dog is just as good a companion and a guard—and possibly better—and that, too, would be a step in the right direction.
I ask the Parliamentary Secretary to consider these points and realise that they are of great importance. There is much suffering and cruelty, as well as damage on farms with consequent loss to the meat ration.

1.32 a.m.

Mr. Anthony Greenwood: I should like to thank the hon. Member for having raised this subject tonight, for it is of tremendous importance to farmers throughout the country. In my own constituency, 16 farmers have grazing rights on the moors between Rawtenstall, Heywood, Rochdale and Bacup, and between November and May they lost 400 sheep as a result of injury by dogs. Apart from the considerable suffering, that means a loss of thousands of meat rations for the public, and a loss to the farmers of about £3,000. I am told that three farmers in the Rossendale district have been forced out of business, while others are giving up sheep keeping.
Most of the trouble was believed to be due to two dogs, one of which has now been destroyed. I may say that the police in the district were most helpful, and I wish that I could say the same of the Ministry of Agriculture. It had been suggested that the pest officers should help in getting rid of the killer dogs, but when the Pennine Sheepkeepers' Association approached the Ministry with this suggestion, the reply was that the trouble occurred during the hours of darkness, which were outside the pest officers' normal hours of duty. I do hope that my hon. Friend's Department will be more helpful to farmers injured in this way.
Because there has been an outbreak of sheep worrying, I hope that we shall not be forced into a hysterical campaign against dogs as a whole. I would like to quote from the current number of "Animal Life," where it states:
Every week a large batch of Press reports reach us from newspapers and journals all over the country, attacking dogs for sheep killing and worrying, and demanding new measures

incorporating anything from the increase of the dog licence to £5 per annum to the right for farmers and others to shoot on sight any dog found trespassing. Mr. A. G. Street, writing in the 'Farmers' Weekly' goes even further and demands that if any dog is found running at large on the public highway, either in the country, or in town, the animal should be destroyed and the owner fined.
We are in danger of blaming the innocent, as well as the guilty, and I do hope that dog-owners will in future show greater responsibility and keep their dogs under adequate control.

1.34 a.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture (Mr. Champion): I am grateful to the hon. and gallant Member for Harborough (Lieut.-Commander Baldock) for having raised tonight a matter of tremendous importance, both to the Ministry and farmers as a whole. I am grateful too to the hon. and gallant Member for having raised a matter in which there is some measure of agreement, despite what he says, because this happens to be my first innings at this Box. I would have chosen another time, of course, but the choice is not mine.
Despite what has been said, the Ministry and successive Ministers have exercised their minds over this problem of the worrying of farm animals by dogs. It is true that there is a considerable number of sheep and poultry killed and injured every year. The Ministry receives many reports of very distressing cases in which pain and suffering has been inflicted on animals as well as involving the farmers themselves in substantial losses.
What is the extent of this? We have tried to obtain figures which will really be comprehensive. We have not been able to do this, but the Ministry has collected details of those cases which were reported to the police. The figures for 1949, the latest complete year, show there were about 6,250 cases of attacks by dogs on livestock; just about one-half of these cases were on poultry and the other half on sheep. But there is very little evidence—indeed, it has not been mentioned tonight—of any attacks on any other livestock.
In these attacks there were some 8,000 sheep and nearly 20,000 poultry killed or injured. For 1950 we have only the sheep figures, and here we see that the figure has gone up from the 8,000 of 1949 to just


over 10,000 in 1950. This is obviously, as was rightly stressed, an extremely serious matter. The value of the losses may be estimated as roughly £50,000 a year for sheep and about half that amount for poultry. The Ministry deplores the amount of suffering that is shown by these figures, but we have got to put the figures in their right economic perspective. Sheep losses are the most serious, but unfortunately other and more important sources of loss to sheep-farmers occur.
Indeed, it is estimated that the losses caused by dogs do not exceed 2 per cent. of the losses of sheep and lambs through natural causes—that is, weather, disease, etc. So we must not exaggerate the economic importance of the losses due to dogs.

Lieut.-Commander Baldock: Lieut.-Commander Baldock rose—

Mr. Champion: I have not very much time.

Lieut.-Commander Baldock: Is it not the case that these losses are concentrated in comparatively small areas and are rather high around the towns?

Mr. Champion: It is true, of course, that there is a greater concentration round the towns. I think the highest figure is in the County of Glamorgan where there is a tremendous urban population and a large sheep population not adequately fenced and so on. This does not, and I do not, diminish or depreciate the loss to farmers or the loss of the meat we can ill-afford. There is, as the hon. and gallant Member rightly said, a considerable reluctance among farmers to keep sheep near towns.
The Ministry is not complacent about this problem, and the thoughts we have exercised fall in two parts; what we can do to make the present measures of control of dogs more effective and what we can do to improve those measures. Obviously, I cannot discuss the second, for it would need new legislation, which we cannot discuss on an adjournment. But we have to remember when we talk of new legislation that we have not got to impose a disproportionate amount of hardship on dog owners. There are some three million dogs licensed in Great Britain, and the great majority do no harm to livestock. We must preserve a balance.
I was going to discuss existing measures, but the hon. and gallant Member has dealt with them. The only measure that he did not mention is that the owner is liable to damages for injury to sheep caused by dogs. We have no reason to think that the police are not enforcing the statutory requirements, or not co-operating fully with farmers. And, may I say, that this is a police matter and certainly not a matter for the pest officer?
We have looked at these 6,250 cases for 1949. The police traced nearly 5,600 dogs, and of these 3,250 were destroyed and 760 ordered under control by the courts. Detection is obviously only one aspect of the matter. Prevention is even more important. The police rightly look for co-operation from all sections of the rural community.
We think, however, that there is very little more that the Ministry can do without legislation, and we have got to look for local initiative to ensure that measures already existing are carried out to the full. Here, it seems, there is ground for work by the N.F.U., or any other appropriate local body, to approach chief constables to discuss the steps which are available, with the resources in legislation and so on, to secure enforcement. There is room for plenty of publicity. The Ministry is continually issuing Press notices and doing all in its power. The N.F.U. and at least one animal welfare organisation undertake considerable publicity. There is an excellent section, too, in the booklet, "Country Code," published recently by the National Parks Commission.
The Ministry will continue to try to bring home to dog owners their responsibilities, and the points that have been brought to our attention will be given careful consideration. This also applies to the fact that the N.F.U. is likely to make representations to the Ministry shortly on this, and I can give the House the undertaking that the Ministry will look very carefully at everything that is presented to us in order that we might end this frightful loss of sheep and the suffering involved.

Adjourned accordingly at a Quarter to Two o'Clock a.m.